London-based unicorn Paddle recently paid $200m to acquire Profitwell, a bootstrapped Boston startup. In this conversation with Dr Sherry Walling, psychologist and host of the Zen Founder podcast, Paddle CEO Christian Owens and Profitwell CEO Patrick Campbell share the inside story of the deal - how it happened, what it means for the teams involved, and where to next.
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Lead Turing Fest 2022
Christian Owens & Patrick Campbell in conversation with Sherry Walling - The Anatomy of An Acquisition
Christian Owens , Patrick Campbell , Dr. Sherry Walling
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Welcome to my office, gentlemen. How are you doing? Ready for a good conversation? Just so you know, Sherry makes people cry. I haven't cried in a little bit, so I'm a little nervous. Are you ready today? Does anyone have some tissue for Patrick be?
Because then I'm definitely gonna cry. She's gonna ask me about my father or something crazy like that. It's gonna be interesting. So Well, I think there's a lot of curiosity around this conversation, around the deal that the two of you struck. But let's start at the beginning just to give people a sense of reference.
So for folks who don't know, maybe give us the one sentence on what Paddle does, what ProfitWell did in its previous iteration, and we'll we'll go from there. Sure. So Paddle is a platform that builds payments infrastructure for other software companies. So we try and take all of the stuff like payments, recurring billing, taxes, compliance, all of this kinda boring stuff that you don't necessarily wanna be doing to grow our business.
And we do it all for you so you can focus on the the important stuff, like your product, your team, how you go to market, all of those things. Okay. And pre acquisition, how many folks were working at Paddle? Roughly two hundred and fifty.
Okay. Alright. ProfitWell, we basically help you grow your subscription company automatically. We're really well known for having a ProfitWellMetrics product that you plugged into your billing system, Chargebee's or Recurly, Stripe, whatever you're using. We gave you all of your financial reporting for free.
We had about twenty percent of the entire market using that product. And then we study all that data, and then what we would do is we would build products that would, you know, do it for you as well in terms of retention, pricing, rev rec, and a couple of other things.
Okay. So every acquisition is a little bit different. And one of the things that I think is notable about this acquisition is that the two of you have known each other for a number of years. Too long. Before before this was ever a twinkle in your eye.
Yeah. So how did you originally meet? So I we've done some content. You've probably seen some profitable content at some point. We I we came to London. I can't remember what I was here for, but it was some conference, and as whenever we go to conferences, we try to, interview a bunch of people for content.
Ended up coming and interviewing this guy. Yep. And we're at their office, South South South London. I don't even know what you've referred South of the river. I don't know. Some fun phrase there. But anyways, long story short, we ended up spending a bunch of time together at that point.
And then we'd see each other at conferences all the time. But one of the most interesting parts is that quite literally when I left their office, I called Facundo, our CPO, and I said two things. I said, one, this is the first person in payments and billing that thinks like us.
This whole do it for you concept. Like that wasn't rehearsed. Like, that's very much like how we both think about, like, the future, I would argue, of SaaS, the future of b to b, is like you should expect more of your products. Instead of, like, you know, giving users WYSIWYG editors and expecting them to be experts at things, like the software should just do the job.
Because you have enough to worry about with your customers and things like that. And then the second thing I said was, if we're gonna get into billing, we have to do it now because they're gonna end up building the thing that we would end up building for payments and billing.
And so, yeah. So there was maybe a little idea planted in the back of your head of maybe these paths will cross sometime. Yeah. Yeah. Yeah. Definitely. I mean, we and then over the years, we'd always like try to figure out how to like partner together.
Someone didn't have the best API, and so we couldn't integrate profitable metrics. Maybe it maybe it was tactical, Patrick. Yeah. Maybe maybe. Well, you never built the metrics, so I don't know. Anyways but, yeah, we were we we would always, like, even though there wasn't, like, a very clear business reason, because, you know, there was plenty of partners that we could have done, like, different marketing stuff with, we'd always do, like, breakfast or dinners at, SaaS talk and those types of things.
And so, yeah, there was definitely there was definitely something something brewing. Yeah. So what was happening maybe under the hood on your side, Christian, that made you think, maybe we should explore the possibility of purchasing ProfitWell? Yeah. For us, interestingly, both businesses have been around for about the same amount of time.
Both about ten years. Almost to the day. Yeah. It was kinda fun. Strangely. Yeah. Like a Harry Potter situation. Like, who's Neville Longbottom? I'm not really sure. If you get the reference, we can be friends. If you don't, you're in Edinburgh, you should know.
But anyways yeah. Yeah. So we we'd obviously been building Paddle for a long time, and our focus had been on the same kind of like do it for you attitude, but to a very different set of problems, but for the same set of kind of customers, same set of businesses.
And we'd very much focus on, like, the behind the scenes operational aspects of running a software company. Like, all of the like, how do you pay taxes in a certain place? And how do you take payments all around the world? All the fun stuff.
All of yeah. The really fun stuff. And then Patrick actually had focused on the fun stuff, which is how do you kind of improve retention? How do you sort of grow the business? How do you make better decisions using data? And for us, this was always like whenever I would and we'd raise money.
Whenever I would go into those, like, VC pitch meetings, I would basically pitch our product road map as sort of, oh, we're gonna do these things as well, like, not mentioning ProfitWell, like, specifically by name, but actually saying that, when we get to enough customers, we can start to use that data to make everybody better.
We can make these companies kinda grow automatically. So sort of behind the scenes, it wasn't necessarily me putting two and two together to say, oh, we should go buy ProfitWell. It was actually the sort of the missions really aligned. And sort of it kind of happened a little bit after that.
You knew you wanted to go in that direction. It just so happened the profit well had had gone there already. Yeah. Yeah. And then how did you move into this more active state of considering, do we wanna acquire them? What were you looking for?
Oh, I sort of I would love to say it was a really scientific, like, process that we went through. I called Patrick one day in October and was like, hey, Patrick. How's he calling me? I was like, hey, Patrick. Yeah. Have you ever thought about selling ProfitWell?
And he I think he probably thought I was calling for a like, oh, we've got an offer to sell Paddle and I wanna talk through it. Yeah. And he was like, yeah, we kind of considered it and sort of like, but we were interested in what we're doing, like, kind of we have a big mission.
I was like, how would you feel about selling it to us? And that was sort of kinda kicked off the purse. At that point, I hadn't spoken to anyone about it. Don't think kind of internally, the board, investors, no one. I kinda just sort of called them up.
Which is notable among acquisitions that that would happen just sort of between a gentleman's conversation Yeah. Rather than some big deep strategy meeting that resulted in outreach. Yeah. I think most founders in the room will realize that most things are not big strategy meetings.
Right. They're they're a little more reactive. I mean, weren't looking to sell either. It was like, it was it was actually the like the first time, like we've been offered, oh, we should buy you, like those types of things, but like never anyone interesting.
Like, you know, I would have said this if this hadn't gone through, but like this was the first conversation where I was like, like that's an alternative route. Because we were bootstrapped up until the point, and we were looking to, like we needed, we knew we needed to raise money going into this particular year, and so that was kind of the plan.
And then having this conversation, and obviously, you know, trusting Christian a lot, just in general, I was like, oh, interesting. Like, it could be something that's really interesting versus, you know, giving up our baby as, you know, it sometimes feels like. And so it was it was one of those things where it was like, okay, if all of these things were checked, like, it's never gonna happen.
But if they were, yeah, we're totally open to like that concept or that idea. And so that's what kind of like kicked off things, at least Yeah. You know, took us off to the races. So how did you shift from, that could work, to deciding it's something that you really were open to slash wanted to do?
I know that you talked with a lot of founders who had an exit. Like You kinda did some research on your side. So, think it started with first, like talking to Facundo, and a bit to Peter, who are kind of my business partners.
And just like figuring out, getting them, or seeing if we were all at the state that I just said, like, are we even open to this possibility? Right? And there were already some existential conversations happening, because we were like, we know for us to, you know, by the end of twenty twenty three, like, we are not a bootstrap company anymore.
Like, where that money comes from, like, we weren't really sure. We're already, you know, starting to get picked up to go into fundraise mode, and those types of things. But I think the other thing that was really important, and I was just alluding to it, was like, we didn't expect a value analysis of basically who we could sell to, as well as like who we could raise money from, and who the relationships we had built.
And what was interesting, and whenever you're kind of, again, it's a very like blessed perspective, because we didn't need to raise money, but we knew to continue to go after what we wanted. We also didn't need to sell, so it was like, we had this opportunity to be like, what do we want?
Right? But that expected value exercise, were not just like a money exercise. It was like, okay, we're gonna hate working there. We're going to love working there. We're gonna love working there, but probably hate our jobs. Like, there was a lot of that that went into it.
And so what kind of spit out of that was like, for us to go work there, the number has to be this, and that's probably not gonna happen, like unless they're really hurting, which is probably not the case. And then raising money had kind of more constants, because like, you you could raise different investors have different inputs into a business, but for the most part, at least in a pre this market, that was kind of the mindset.
And then, to kind of skip towards the end, and we can go back to some of the middle, the other really important thing was, we try not to do anything from like dictatorship or anything like that. Like hierarchy for us at least exists in a it's there for when there's emergencies or something needs to be done, like going into COVID and figuring out, are we cutting, are we doing, you know, furloughs, whatever it is.
That's what hierarchy's for. But we wanted to make sure that like, the core, like, ten folks were on board. Right? And so after we had gone through, like, talking to a bunch of people, and you know, going through a sales process, and you know, doing a little bit of a fundraise process as well, That was the final thing, is we were like, hey, we have these offers.
These are all the details to these ten folks. Yes, like we're gonna make the final decision as the main partners, but if you guys are all against this, we're not gonna do it. And so we all got into a room, and we gave that, and then Faku and I walked out, and we basically said, we're gonna come back whenever, after these two milestones of the day, and argue the opposite side of whatever you guys come up with, which was really helpful.
And then, you know, basically, you know, the output of that night was, alright, we're signing the term sheet tomorrow to to get acquired. It's a really interesting process. So you had sort of several options that you outlined to these ten core members of your team.
Yeah. And said, what do you all think? Debate it. Here's the pros and cons. Yeah. And it was very because I think like having, like, again, very like choosy position that we were in, right? And so we had not finished a fundraise process, but we had like, I know you can't count on preliminary term sheet type of stuff, but we basically had that, and the market was in a much better place than it is now, so we could kind of trust it.
And then we had like actual, you know, essentially LOIs from a couple of different folks. And so, was one of those things that were super transparent, because they had not gone through this process, like that we had, and they didn't talk to the I spoke with thirty founders who had sold of like my own personal, like, this something that I would like to do?
So that helped steer. And so they were able to look at it, essentially with fresh eyes and like red team, whatever the right decision was, and kinda go from there. Okay. How was that on your side, Christian? Was there a backroom conversation about whether ProfitWell made sense?
Like, how did you go through that internal process of deciding whether or not to move forward? Yeah. I think once sort of got Patrick and I had had the conversation where Patrick was like, look, we're we would kind of got to the point where we had some of those internal discussions.
We hadn't given a time sheet or an offer or anything. It was more still in the realm of like, is this the thing that could happen? And I think when Patrick and team got to the point where they were, like, we're willing to go through a process and take it seriously enough that, like, at the end of it, there will be an outcome.
The outcome will be either we'll sell the business or we won't. I when we got to that point, I started talking to people internally about it on our exec team. And it's really interesting because it's one of those acquisitions where if you understand what each business does individually, it's really obvious how they would come together.
So everybody's initial reaction to it was like, oh, that's great. Like, that's a really good idea. Like, why let's do that. And then all of the debate actually became about sort of, well, these are two very different businesses. Like, at at the time, Paddle had raised a hundred million dollars and ProfitWell had raised nothing.
It can bootstrap roughly the same age of business, same customer base, like that kind of stuff, but wildly different kind of trajectories and paths to get there. So it really became a lot of these conversations of of like, are they are they because we wouldn't be buying it just for the product or just for the the customers, or we'd be buying it for Patrick and for Kundo and Peter and the rest of the team as well.
And that was sort of like one of the conditions that we came to was was like, you guys have to wanna stick around. Like, you have to wanna build this business together. Then it became was an interesting learning too. So the of those ten people, the average tenure was about six years.
I looked at that as like, these are some loyal *************. Right? Like, everyone would love that. Right? And acquirers look at that as like, they're gonna take the money and leave. Yep. Which was a really interesting, you know, situation. And so that that was a really kind of fascinating learning, sorry to interrupt you.
No. No. That was part of our our piece because sort of we were going through the team and we're like, sort of I think the average tenure at Paddle, not in terms of people who leave, but just because we were hiring so quickly, was like twelve, eighteen months.
So we're looking at Patrick and Vakku who've been doing this for nearly ten years and Peter as well and being like, do they wanna cash a check and leave? Like and then the same thing for the kind of the rest of the team.
So there were a lot of those discussions internally, but there was never really any doubt that this is something that providing that like, our list of things, we could check the boxes, which were people, things, and obviously price and sort of So not a question of if to do it, but more a question of how.
How? Yeah. Yeah. What was it gonna What are the mechanics to actually make this thing work? I wanna talk more about the team, but I wanna talk about the deal. Nice. You wanna talk about deal? I I have one thing because I think it's really Okay.
Simple. If you're ever trying to sell and you have the option to be choosy or, like, you are blessed to have multiple suitors, what you or the core part of your team want to do is really, really important. Because I think what helped, and actually helped what Christian just brought up, was that we very much did not want a rest invest, or here's the keys, we'll see you later type deal.
And that came out of some founder discussions, where a lot of the founders who had done those deals were really unhappy. They had the money, so maybe they're not really as honest as they can be. But it was one of those things that like, as soon as like we talked about that, and you know, I was pretty we're we're just very transparent with each other in general.
But I was very transparent of like, yeah, we got this offer, but like, want us to basically leave. Or they're gonna give us glorified director roles, and everyone's gonna be in IC. Like, we're not even really gonna consider that. And and that kinda helped not only with those internal discussions on his end, but just in general, like contextualize what we wanted.
So Yeah. And maybe we can flesh that out together a little bit more for the audience. So you have these sort of different dials that you can turn when you're thinking about a deal like this. Yeah. One is obviously cash. One is how the team is integrated or sort of the deal for the team.
What are the other things that you you can negotiate on or that you wanna consider if you're structuring a deal like this? Sort of how I think one of the big ones sort of like price and everything is important, but I think one of the big ones for the team there and and for Patrick was, are we gonna have like is this gonna be meaningful?
Yeah. Like, are we gonna have roles in the combined business where we're gonna feel like we're it's we're, in some respects, still in control of our own destiny a little bit. Yeah. Leverage. The way we described that, it was like, we want leverage.
Like, we wanna be able to It's kind of funny, you know, we were making the comment about founders just kinda leave, or whatever. Just like, my mind, I was like, and then they met me, and knew that that wasn't gonna happen. And so, it was like one of those things where it was like, if we were walking into a company where we didn't have that leverage, where we kind of felt like we were just put aside or something like that, it's better to leave, but that's not what we wanted.
And so, I think that was a really big thing that we flushed out a lot. You know, even post term sheet, like even in diligence, there's still a lot of those conversations happening about like, okay, we're on board, but like how does this actually look?
Like, does this work? Who does what? Who does what? All that kind of fun stuff. Why didn't you wanna leave, Patrick? Because in a in a way, you've worked hard for six, seven years. You're gonna walk away with a bucket of money. Like, it Yeah.
Would be a nice time to say, peace out. My work is done. I'm gonna do something else. Yeah. Well, my childhood, Sherry. Think issues. I I think it's I think there's like a I was thinking about this this morning, actually. I think that there's like a like, some like, how many people here are founders or wanna be a founder one day?
A couple of you. Who are the rest of you? No. I'm just kidding. But I think that like, it's a I didn't appreciate this when I started I founded I founded a company because I was like I felt I always cared more than my boss.
I never wanted to go into business, like it was just not a thing. I come from a very blue collar background, and so it was like, I'm gonna go be a lawyer or something like that, and then I just fell into business, and was like, I feel like I care more.
I don't think I ever actually did, but I always felt that. So I was like, if I'm not gonna do it now, I'm gonna do it later. And then, what I kinda got addicted to was like purpose, if that makes sense. And so, this kind of has become my purpose.
And it's not that this vessel necessarily needs to be my purpose, but I'm working on this because I don't have a better alternative or a better it's not even a better idea, but like something that interests me more. Like, I fell in love with SaaS and pricing and all these other things, which, you know, again, makes me a fascinating friend, I guess, is the best way to put it.
But like, it's just one of those things that like, I wasn't ready. And then the other thing is, when I was having I I talked to these thirty founders who had exits, and I was like, do you regret it? And, you know, of those fifteen were the ones who like handed over the keys or like were there for like a year, that was the expectation.
Of eight of eight of those fifteen, they really struggled with that. Yeah. And then three of those became basically like drug addicts or alcoholics. And I wasn't thinking that's what I was gonna become, but like that lesson was very like, oh, purpose is really, really important.
And it's not that obviously, like your purpose has to be a company, but it was one of those things where like, that's where my purpose comes from, is like the grind. And so, it was very much like, I wasn't ready to like, stop.
Right? And I still am not. Right? And that's a lot about being It's still meaningful to you. It's very unhealthy probably, but like, Sherry and I will talk after to fix that. So that's good. Yeah. I actually wanna affirm how healthy I think it is. Great.
Not that you need my feedback, but Yeah. Yeah. So many people in these transitions, when they're not anchored to something that's meaningful, that's when they get lost. Yeah. So the fact that you realize this is still meaningful to me. I still wanna do it.
Yeah. It's important. So so two hundred million dollars. This is the big headline. This is the big deal. How did you all come to that very big number? We started with a lower number. If you so just to always be closing, if you go to the documentary we filmed after this, at the live stage or whatever it was called there, the actual voice memo, it's a real voice memo that I sent him about the final number is in the documentary.
But it yeah. It started with a lower number and then it became a higher number. And so, yeah. Did we get like, what was in that voice mail? You have to go listen to it. Yeah. Yeah. But no, it's it's it's really hard.
Right? Because and this is also why raising money was I don't think it it wasn't going to be it was gonna be as difficult as selling the company, because we were we're not like this picture perfect one product SaaS product. Right? We have a free product that is used by tons of people.
Right? But how do you like value that? Right? We have pure SaaS revenue that's growing in a really good way. Then we have this like high margin tech enabled service business with our pricing software and service. And so like, that doesn't have like a beautiful, like perfect multiple.
Right? And then we're a bootstrap business, so it's not like we're double, double, triple, double, double. No one actually is. I have the metrics to show you that. But it's the expectation of VCs. And so it was one of those things where like, it was hard, like initially, like Yeah.
Their their CFO comes with this like multiple kind of thing. A smaller number. And we were like It's quite substantially smaller number. Yeah. Like missing zero. Well, we were like, yeah. We'll just we'll just run the business for two years. Like, **** that. Like, it wasn't like Yeah.
And we weren't rude about it, but that was kind of the like, well, maybe we were. I don't know, actually. But we're we're we're but we were just kinda like, okay. Like We're gonna learn some stuff today. Yeah. Yeah. But that's what the hard part was. Right?
Because then we're also having these other comps, like with because we're doing a process. Right? We're like, we're dating other people. Sorry. But it's just like one of those things where you're all of a sudden like testing the market. And we we were we were sitting there and we're like, people think we're pretty.
Like, people think we're cool. Because we I I don't know. The founders in the room, no matter if you have success, you're still like, I suck every day. Like, I need to be better. Right? And so we were like, okay. And then what ended up happening is I was just like, I went to I had these other constituencies as well.
Like, I went to like the constituent, it was just, you know, Facundo Peter, but also like we have these other advisors and stuff like that. And I just was like, like, we need a number, and like, we need to be comfortable with that number.
And if they say yes, we go. Right? So you had that number in your head. Well, so we had some comps from these other, you know, conversations, and we had some paper from some other folks already. And it was like one of those things where there was there was like, and it's hard, because again, that expected value formula is not just the cash and stock and all that kind of stuff.
It's other stuff. Right? So there were like, from a cash perspective, like, maybe more lucrative deals. Right? Yet, calculating this gets a little more complicated. And so, it was one of those things where I was just like, this feels like the right thing, but, like, it has to be at least this number, and just went and said, like, hey, if you do this, we're done talking.
Let's go. And then he, like, fainted and figured it out. Yeah. All that kind stuff. After you were revived. Yes. Yeah. Was it was it contentious on your side? Like, I mean, was there a moment of like Actually, I don't know the answer to this.
Yeah. Contentious like getting to the number or yeah. Yeah. Was that was that a a painful conversation? It's kinda this is kinda one of those things where and you can listen to the voice note in the the the film, but Right after this at the live stage, just listen.
But, like, when you offer something and then someone comes back to you and goes, no. It's it's it's two hundred and we sign tomorrow. Hence, the name of the film is we sign tomorrow. Yeah. Like, stuff costs costs how much it costs. So once you have that kind of variable, you're either willing to pay it or you're not.
So we kind of got to the point where it was, okay, we really wanna do this thing. We think strategically it makes sense. If and the the logic on our side was, if this doesn't work, yeah, we've wasted two hundred million dollars. But if it waste it.
All the time. But if it does work, two hundred million dollars is gonna be a rounding error. How will you know, and when will you know? Is it one year from now, five years from now? If it's one year from now, I was way underpriced.
Yeah. It's somewhere between one and five years from now. We all know. Like, I think kind of I think we're gonna we're gonna go through and these things aren't binary as well. Like, it's it's it's but it was to answer the, I think, the question, it was it was one of those things once once we because you go through this dance, like, to begin with Of like, oh, how about this amount?
And they're like, no. And then you're like, how about this amount? And they're like, maybe not. Like and then obviously, they're going through this process with six other people as well. Or nine, I found out this morning. It was twelve. It was twelve. It was twelve.
So you're going through this with nine other people, so nobody's no one's being completely straightforward with each other. And then I think the benefit of Patrick and I knowing each other for five, six years beforehand was his ability to send me that voice note.
Just to speak directly to This is the number. Look, wanna do it. The number is x. Well, notice, like, we didn't use a banker cause we we knew we were going to people that we pretty much knew. And that's like one thing, like, you need to meet the people that you could potentially sell to.
One thing that we had done in our, like, board decks was basically, like, we had a couple slides for like, m and a. And it was just like, who are the possible people we could sell to? Who do we have a relationship with?
If anyone, sometimes it was we don't have one, and then like, what's the strength of that? And it was also like, who we could acquire? So we had two slides basically. And that helped a lot, because as soon as like we started getting to a process, we were like, yeah, we don't we don't wanna go to the P route, because we don't like those options.
And it's not that those options are bad, they just weren't for us. And then we kinda knew who to go to. The other part was, like, building that relationship, even if it's just at, conferences and those types of things. And then the third thing, I I don't think this deal would have happened unless Christian switched to iMessage instead of WhatsApp.
Like Genuinely. Genuinely. No. Because in the States, like, we use iMessage. Right? And I'm trying and now I have a bunch of European colleagues, and I'm trying to switch to WhatsApp, and it's a terrible experience. It would take me three days to get a reply It would take them three days.
And as soon as iMessage, it's, like, any time of day. Yeah. Yeah. Okay. Like, eight seconds. Yeah. Exactly. So yeah. The details of the deal, ladies and Yeah. But, like, once we kind of once Patrick had sent that and we'd had a pretty a fairly brief discussion internally, it was more the question wasn't anything other than, okay, how are we gonna pay for it?
And, like, that became the question rather than if we were gonna. Was there a moment when this deal almost fell apart? Or once you figured out the price I think the how? At least from our my perspective, we also had conversate like, we signed the term sheet, or right before we sent or I think it was after we were I was we had an understanding and a conversation of like, this is the deal.
We're both gonna work really hard to like get this done, because lawyers get involved, and they always win, but they also are they they serve a really good purpose. It's just sometimes You have some funny lawyer stories. Yeah. There were eighty six We might not have time for them now, but ask the lawyer stories.
Yeah. But long story short, we ended up, like, we were like, this is the price, like, confirmatory diligence. Like, we had a very, like, let's not let's try not to spin our wheels on diligence, like, that long. But I do think, like, Christian had to go we had to go out and raise money.
And so and so it was one of those things where there was a lot of when you're in diligence, and especially, like, going through a fundraise process, which technically started January fifteenth. And just to give you a little history, the market tanked the next week, like the initial tanking, and the market has not recovered since, basically.
War war in Ukraine started, like, kind of A month later. Building up, and then all of a sudden, invasion happened. And that I don't not to tell your story, but, like, got to a couple of term sheets. One of the well or like, we're gonna send it Monday, like, really nice dinner, and then someone completely ghosted us.
And it wasn't it wasn't even that new of a firm, but I think it was newer partners, so they never gone through something like this. And then KKR, to their credit, like, they were just like steady, because they had never They're new for twenty five years.
They were founded, you know, in the seventies, and they're just like, yeah, we've seen everything. Like, this doesn't faze us, that type of a thing. And so there was nothing like, oh my gosh, if this doesn't get figured out, it's gonna all fall apart once the term sheet was signed.
There were a couple of those things announced. Great. I don't really give a ****. What happened? Sure. Yeah. Yeah. It's fine. What happened, Kristen? What happened? Yeah. No. I think I think the the stark difference between the two businesses was no one had ever sort of looked under the hood of profit well ever.
Never raised any money. Never tried to sell the business before. Yeah. Never done anything. My favorite was, you get this list of like three hundred things for diligence, and we're like, yeah, don't have a hundred and fifty of these things. And they're like, well, can you get them? We're like, no.
Like like, they're like, we want five years of audited financials. And we're like, we've never had our financials audited. They're like, is something wrong? We're like, no. We have one guy. His name's Andy. He's been doing our finances for seven years. Like, Andy knows everything, but I don't know if it's documented.
Yeah. That's Yeah. Different. Yeah. Go ask Andy. Yeah. Yeah. Yeah. Yeah. So Andy became critical. We broke Andy. I'll just say it. We broke Andy. He was burnt out before the deal, and I remember the conversate Andy could've tanked us. And I was like, hey, man.
You know how we said you were gonna go on sabbatical? I was like, yes. We we're selling the company. He's like, what? I was like, yeah. We're gonna need you for the next two months. Yeah. Ended up being four months, you know, for the deal and stuff like that.
So So I think that was that was probably the thing on our side. No specific, like, one thing But just an accumulation of a hundred and eighty seven different things that Patrick didn't have. The It's like a hundred and forty. That's fine. Yeah.
But it was sort of like an accumulation of all of these things, where it was like because, like, everybody goes and you come to things like this and you read in TechCrunch or whatever. You're like, oh, everything's great everywhere, all the time, like all the time.
And obviously, as being a person in a business, you know that that's never the case and everything is terrible all the time. Yeah. So reality is somewhere in the middle. But, like, you don't like, whenever you go into a situation, you always assume that someone else has their **** together more than you do.
Yeah. And they did not. Like, less than you thought. Yeah. I love you. Well, due diligence is always more do. Yeah. Like growth. Yeah. I will say that there is something that's really actionable for everybody. Like, there's two things. One, when you're in sales mode, especially to, like, sell a company, even if it's reactive, do not lie about your numbers.
Like, we didn't. I know people who I've talked to who do, and then all of a sudden, diligence, it's like it's not that these numbers are like, well, yeah, was like this number, but it's a little off because things change. But it's like, oh, this was noticeably off.
And you like, those people think, like, oh, We're just still gonna sell. It's like, no. Why would you? Like, because that was such a fundamental thing. Yeah. And then the second thing is, we were told, I think, like, five years ago, when it was like, oh, we're thinking of hiring, like, a proper ops person, which we didn't hire.
But and someone said, the first thing you should assign that person is prep the company for sale. The those keywords. And it doesn't mean you're selling. It just means, like, get the company into a position where you can sell. What we should have done is we should have gone to our lawyer and said, hey, can you send us a list that, like your last deal, the diligence list, just so we can, you know, figure this out?
And instead what we did is we went, what would that mean? First, like, prep the company for sale, and then did a bunch of things, which was good, but it was nowhere near the number of things that we should have done in that in that science.
So that's something that, like, you probably should just do for proper hygiene. You've raised money before, you probably already have those things. But if you're a bootstrap company, it's something that's important. Lots of paperwork. Dude, lawyers always win. Lawyers always win. I was told that I I was it was strongly implied that I could go to prison by a lawyer in this deal.
So that was a fun conversation. I'm glad you're still here. Yeah. Yeah. Yeah. Yeah. It was an overzealous lawyer, just to be clear. Yeah. Like, yeah. Yeah. Did you celebrate? What's that? When are we celebrating? We didn't we have we? We didn't really celebrate at all. Yeah.
Really? Why not? It's kind of a big deal. Yeah. Being two hundred million dollars poorer? Yeah. Yeah. Maybe not so much for deal. You have the largest subscription database in the world now. So that's fine. No. Yeah. It's interesting. Literally so here's what happened.
Like, the closed date kept getting pushed back because there was this magic, like, nesting doll situation that needed to happen because, you know, investors have to send the money. The money has to go to like, it was just lawyers again. They, like, win, but then they also take forever on certain things, which is always fun.
But what ended up happening is we literally flew to London for like, we had signed, and then there was a bunch of things to close. Most of that all was done, but we flew to London for an ex Exco off-site. Jumped right in. Nothing about the deal.
Just like, what are we gonna do? Who's gonna take over what? All that kind of stuff. Then we did a summit the next week with the entire company coming to y Boston to do, like, basically a retreat and come together, and then we've just been running since.
That was a bit of a celebration. I feel like at least you should It wasn't for have a bottle of champagne or something. It wasn't. Like, I had a drink for the first time in like two years, so that was good. Yeah. You should probably clarify.
Oh, yeah. I'm not an alcoholic or anything. It was more just like, I just wasn't drinking during COVID and Yeah. You know, just see saw how far it could go, but yeah. It's interesting. We are running out of minutes, unfortunately, but I wanna ask you if I could briefly.
You're combining these teams. Right? Two different companies based in two different places with two different cultures. How's it going? It's kind of like a blended family. Right? You've got the the stepchildren all getting to know each other and getting along. Well, the parents are ecstatic.
I think the kids are not happy. No. Yeah. It's tough. It is really tough. Yeah. It's it's it's tough for a lot of different reasons for a lot of different people, and I think there are so many questions where the answer has to be, don't know.
Yeah. People don't like that. And people don't like that. Yeah. They really don't. And I think that both of us and the exec teams and others are confident that we'll figure this stuff out. But it does require everybody's patience during that period, and it means that you have two ways of doing everything.
Every possible process, even the smallest things, like how do you submit an expense report? There's two ways of doing it. We have three expense systems right now. And and sort of there's and it's all of it's to be honest, like, the big stuff, like, what's the mission?
Complete a hundred percent alignment day one. Yeah. Everybody knows. That's what's so critical. The big picture is great. The big picture stuff this is why I said the parents are happy, but, like, all the kids are upset. Because the big picture stuff, everyone gets. It's yes.
It needs, like, some, you know, context and stuff like that, but, like, everything makes sense. Even some of like, most of the culture stuff, like, the big things of, like, we would like to take the combined company this way or that way, or we're gonna take this from here and this from here, all of that.
It's all the mid level, not people, but mid level parts of that, and then the small details of the parts of that, that it's like all that stuff has to be figured out. And as classic, like, founders or execs, we're like, yeah. Well, the big stuff's figured out.
Why is that complicated? You know? And it's complicated because it's what's really interesting, and we've said this so many times, it's like everyone is so nice about trying to figure it out That it's like this weird, so should we do a or b?
I don't know. What do you think? You know? And it's like, there's a forty percent conversation tax on everything. And I think that when you, when when you're told about an integrate like, everyone was like, yeah, integrations are really hard. There were investors who were like, yeah, we don't fund integrations, unfortunately.
We were like, oh, those guys are wusses. That sucks. Like, why is that? That's dumb. And then we're getting we we're past the honeymoon stage, and we're like, oh, we totally get it now. Because it the mission, the products, like the fit, there's no like overlap, no one had to be let go or anything like that.
All of that stuff's like perfect, or at least near perfect. It's just all the other details you don't you just don't think are gonna be a thing. And then you have to work through all of those things, which is really, really difficult. So there's that slowdown in efficiency into companies where you've been used to efficiency.
And there's not an easy, like, target for some of the angst because it's like, again, everyone's really right answer. Yeah. And there's no right answer. So it'd be really easy if someone was, like, you know, being a jerk or something like that. And it's just like, yeah, well, we hate that guy.
So, like, that's where we'll, like, look to this. But everyone's just like, no. Let's figure it out. Like, when we figure this out, everything's gonna be amazing. It's just that messy middle that's just really complicated. Yeah. And then there's all the operational details that you don't even consider.
It's like we have two slacks. Like Oh my god. Just got combined Two notions. Like, we have like all these things, and it's sort of like all of the administrative stuff that has to be somebody's responsibility to fix that stuff. But it's those things that like, if there's a forty percent tax on every conversation and decision, there's also like a forty percent tax on, like, doing stuff.
Yeah. When the expectation game gets weird, right? Like we were talking about this at lunch. It's like, all of a sudden you have like our team is like, we're gonna have more than just Andy, like in finance. Like, they have like twenty people in finance. Right?
And everyone was like, oh my god. Thank god. Right? And then they, like, they get that, and they're like, well, why is it so slow? And it's like, why is it this? Why is it that? And it's like, well, this is what you wanted. Right?
And you're like, yeah. But there's some trade offs to that. Yeah. Right? Like Yep. We have a proper HR and people team now, and it's like You wanted a process. Yeah. You wanted the process. The process this is what a process is. Right?
And so, it's interesting. The one thing I have we found we're talking about is like, the team kind of follows the exec process. What I mean by that is like, the exec team gets really frustrated because we're figuring this thing out. Within two weeks, the team will complain about that thing.
Right? And so that's like a really good sort of a two or three week trail Yeah. Yeah. Whatever you all are working together. So we we know, like, oh, they're gonna feel better in two to three weeks. It took us that time. Right?
Like, that type of a thing, and it Yeah. Seems to be right. The things that are being kind of coming up in a survey or being kinda complained about, the stuff that we had our big kind of, like, contentious, like, conversation about two weeks ago, and now we're over it, and we we realize we're aligned.
And the kind of team has to go through the same journey that we're going, but sort of on a little bit of a delay. It's a little harder. Communicate, communicate, communicate a ton. Yeah. Like, just as many AMAs until everyone's annoyed with them.
Like, I think that's Is that the thing that you would recommend to other founders who are considering the same process? The emphasis on communication. In my opinion, yes. But also, some of the problems that came up with this as well are we have this, like, vision of something right before close, and we get really excited about it.
We then start talking we, like, tell the entire team that. And then all of a sudden, a month later, we gain a lot more information, and we're like, oh, thirty day ago, Christian and Patrick were idiots. We need to do this thing now.
And the team's like, what the ****? Right? You know, like, what's going on? Right? So I think it's like going in with patients, patients, patients, like communicating, hey, everyone's gotta be patient. We're gonna figure some of this stuff out. And then probably, like, some of these it's gonna be really hard, but like, talk about how, hey, this is the plan right now, but keep in mind, like have a rip cord.
Like, keep in mind, we're finding out more information about each other. We're finding out more information about our processes every single day. And so things are gonna this is gonna be like nine months of a lot of change, which I think is really important.
Sort of buckle up for change. Yeah. Well, there is so much more that I feel like we could talk about, but good thing you made a movie about it. Yeah. Yeah. So folks want more details, you can go and watch the the movie in the lounge after the session.
Thank you so much to both of you for the conversation, and congratulations. Thank you. Appreciate it.