A Niche SaaS Master Shares His Tips for Creating Two 6-Figure Acquisitions

All right. I am here with Justin, who got two startups acquired for six figures. Zendesk Marketplace Apps and Swim Gen. Justin, how you doing today?

I'm doing well, thanks.

Well, thanks for coming on the pod and huge Congress in having two SaaS companies acquired for six figures. But for those that may not know you, do you want to give just a brief introduction of yourself?

Yeah, for sure. So ever since like high school when I was really young into programming, making things, I'm actually one of the two apps Sim gen that got acquired. I started back in high school when I was 16, and then after university, I worked in the games industry a bunch. So worked as a game programmer and then I was a technical lead and general manager at a game company. But on the side of my spare time, I'd been working on these apps and then did a pretty big switch in. In 2020, 2021 more or less left tech and I actually opened a rock climbing and ninja warrior gym with my, my. With my wife and a friend. So, yeah, it was, it was a lot going on and so had to find time somewhere and that was part of the push to, to get acquired those two hours.

Nice. Yeah, I love, I love the Copycat, by the way. The. We're just. We're just getting started.

Yeah.

All right. What made you want to, you know, start these two different companies? They're both great businesses, highly profitable. How'd you get. I know this is kind of like a double whammy question, but. Yeah, because we're talking about two. Two businesses here. But what gave you the idea for Zendesk Marketplace apps and then maybe also swimgen? This might be difficult to talk about. Yeah, once. But let's try.

We can go chronologically. Swimgen came first. So back in 2009, I worked as a swim instructor and a lifeguard, and I would have to do hundreds of report cards the end of the season for the kids that I taught swimming lessons to, and my hand was physically hurting. And, you know, you're racking your brain trying to come up with, you know, good feedback for the kids. And it's so easy to just write, great job, see you next season, and just leave it at that. But you want to give good feedback to the kids. So at the time I was taking programming in high school, and so for a project, I made a desktop app where you would pick strengths. So, like, just two quick things. The swimmer was good at two that they can work on, and it would just create a paragraph of feedback for them that was highly actionable and Then I had like a printer template and I could put the report card into my printer and it would kind of put it in the box. Then one thing led to another where like the local YMCA said, hey, this looks really cool, but can we go green with it? Can we publish the report cards online? And then sort of just bootstrapped it with that, that first customer. And through word of mouth, like every YMCA in Canada was publishing on this, along with, you know, municipalities, military bases, what have you. And so we grew from like one customer to hundreds of pools managing their entire report card flow through swimgen. There.

Nice. I love how you had like a personal insight just based on what you were doing. I love businesses like that where you're doing, you're doing something manually and then you just automate it with software.

Yeah, exactly. And then like the cost for staffing, like the staff do the report cards way faster, the quality of the report card goes up, they don't have to print paper anymore. And so, like, there's cost savings and it was really easy for them to kind of jump on, on board with it.

Tell me more about, tell me more about the other business that you sold. Zendesk Marketplace.

Yeah, yeah. So Zendesk, it's a customer support system. You have agents, they get support tickets from customers, they answer them. So Zendesk has the system where you can have apps in the sidebar for the, the agents who are providing the support, they can do all kinds of things. Now Zendesk had created a bunch of free apps to sort of, I guess, jumpstart their, their app ecosystem. And they were releasing some breaking changes in the app API and they were going to be sunsetting all of their free apps. They, they weren't intending to put out a new updated version. And so a bunch of companies were scrambling. They're like, well, you know, we really need this app. It's part of our daily workflow. So then I, I kind of saw an opportunity. I was like, well, people currently use this. I can see there's installs on it and these people are going to have it taken away. So I just kind of jumped on that opportunity. So I, I recreated a bunch of the, the apps that had been available for free, nominal price of know, $1 per support agent per month, and managed to get those out really quick. And then, yeah, there was like, really quick adoption on them. Um, and then, you know, Zendesk even recommended, once these were in place, like, oh, you know, the old one's getting sunset, but you can switch to this new version and so just. Yeah, it was, it was just this bizarre opportunity that was, that showed up and swimgen was a labor of love for over a decade, but some of these apps I managed to make in like an evening type thing. So it was, it was pretty interesting.

Nice.

I love how much easier it was there.

I love how you were able to again, spot a market opportunity from a larger company.

Yeah.

Shutting something down and then you said, wait, no, that's still valuable. I'm gonna make it. And then. Yeah, turn it into a business. So now, now I'm wondering, okay, so you built, you built two different startups to significant revenue, both acquired. What do you have, like a thought process, like when you build companies or how you think about building products or validating them or.

Yeah.

How do you go from zero to one is kind of what I'm trying.

To figure out for me. I think you kind of touched on this with Swim Gen, but I'm kind of like dog fooding my own products. Right. So it's like I need this thing and I can see the value in it and I fully understand the end user and I can like build something to satisfy that.

Right.

And if it can help me, I'm sure there's others like me out there. So with the industry I'm in now, there are existing things, other thing, otherwise I would already be onto the next one. But for rock climbing gyms in particular, there's, you know, established software that's been built specifically for rock climbing gyms and for Ninja, where there's established software specifically for that that does the job quite well. But in the absence of either of those, I'm. I'm sure I would already be deep, deep into, you know, the third or the, the fourth one. Yeah.

I like how niche the, the problems that you solve are.

Yeah. Because you can try and be everything to everyone, but it's like, you know, you can pick this one specific problem and then, you know, it's swimming pools that you can go for or something.

Yeah, vertical SaaS is, is my favorite. The more boring, the better the markets that people don't go after anything but selling to startup founders. And I know I run a marketplace that helps startup founders, but, you know, boring industries like pools, you know, rock climbing, those. Those are massively overlooked markets that are big and have a lot of opportunity in it. So. Right on. So what? So, so you get the product market fit these, these businesses begin taking off. Were you running them both at the same time?

Yeah, both at the same time. So Swim gen started in 2009, the Zendesk ones only in 2019. The day to day support for the Zendesk apps wasn't too, too heavy, but the Swim gen side was a lot heavier. Had like pretty personal relationships with a lot of the pools just from the early days, you know, the, the roadmap was driven by what the pools needed and I visited some pools in person and, and things like that over the years. Yeah, they overlapped for three years or so though. Yeah.

So what made you, so you, you, you got to product market fit. The businesses are profitable. They're, they're doing really well by the, the looks of them. What made you want to sell both of these, these businesses?

Yeah, so swimgen was first with the new climbing gym and everything. I was pretty busy and since it's up to my wife and I to do the customer support on sim gen, sometimes go days at a time where I didn't get back to people and you know, I was pretty personally invested in sim gen and the help that it was providing to pools. So there were some days where I felt like I was kind of letting the customers down and so I wanted to find someone that could do right by the customers, give them the support that they deserve and then just sort of take a bit of a burden off of my shoulders so I could focus on other things. So that was sort of the motivation for swimgen to sell it.

What about the other one, Zendesk Marketplace, There's a fun podcast we're talking about.

That one was pretty light on support, but it, I had. So I hadn't thought about it until after Swim gen and then I'm in, I'm in Canada. And like the Zendesk apps, they were at a good spot but they had plateaued. I wasn't going to be able to grow it anymore with, with you know, the time I had available. And then the US exchange rate was looking pretty good at the time for U.S. to Canada dollars, like 35 or 40% premium converting. So it's like ah, you know what, like I'll just, I'll just take it. Um, like I'll, I'll sell now and then I'll kind of be like comfortable and don't have to worry about, you know, paying myself from the gym type thing. Just a bit of a safety cushion. And then you know, all the, all the tech is sort of behind me for now.

That can actually, that can be a huge factor with acquisitions in terms of just the timing at which you sell your business. I've seen a number of different Businesses like AI companies is probably a good example where if you sold them eight months ago, worth millions and then now zero, like absolutely zero. So that can, that can happen a lot with, with different businesses, especially if, you know, like you said, you're not able to keep up with support or. Yeah. Or you just want to cash in your chips. You know, there's nothing wrong with either of those. So kudos to you for the, the timing on both of those. How did, if I can ask, how did you find out about acquire.com?

Yeah, I didn't know the first thing about selling a business. I think as, like, most people just go to Google, like, how to sell SaaS business type thing. Looked around at a bunch of places and then, yeah, Acquire seemed like the best fit for me because I could just make the listing and go from there. I didn't need it fully managed or anything. I was ready to put in some of the work to speak with everyone, like potential buyers and everything. So I was Google Search.

Nice.

Yeah.

So I guess our. Our SEO, it's paying off.

On point. Yeah. Those articles you're writing got all the right buzzwords. You're good.

All right, I'll let my content team know, but. Okay, so now I'm. Now I'm curious. So maybe we can still keep going back and forth on the two different businesses, but what was your experience within the first, you know, two weeks? You go live on Acquire? What was your expectations? What. What was the first two weeks like?

Yeah, I think I went in with pretty well. No expectations. I didn't know what to expect. Your team helped me to, you know, include all the right information in the listing because I'd done the preliminary one and they said, hey, let's just make these tweaks. Let's surface this, that kind of stuff.

Who did you. Who'd you speak to? If I can ask?

Oh, I'd have to dig through my.

Email to remember Ebony, Matt Kai, I think.

Ebony.

Yeah, Ebony.

Yeah.

Yeah.

So we went through the. We went through the listing together and, like, touched it up and, and that way just they know all the info they need, you know, more upfront and everything. See, I didn't really know what to expect, but it's exciting. Like, you get an email every time, you know, a potential buyer sends the NDA and gets your info package. And the first few interactions, people had a lot of questions. But anytime you go digging and you answer their questions, you know, you just put that with all the other data. And then for any future folks that come along, it's there. And so the data you have available for people just gets more and more complete, more robust and everything. So it got easier the more conversations that I had with folks. And I got to meet a lot of different folks with a lot of different backgrounds and motivations and everything. And that was pretty neat for me to see.

Nice. Yeah, the buyer pool can be, can be kind of fun to watch because you'll meet, you know, founders of public companies, you'll meet heads of large private equity firms, individual, everybody in between, I guess. Now, now I'm kind of curious in terms of, you know, you go live on acquire.com you have all these buyers interested in both these businesses. How did you figure out who the right buyer was for these businesses?

Yeah, for swimgen, I felt quite strongly about making sure the right person was taking it on. And so the private equity firms, family offices, the more business y folks I was shying away from a little bit. In the end, I did sell it to sort of like passionate semi retired dev who would be handling it all themselves, just like myself, which was awesome to see. And then. Yeah, and his, his wife helping as well. So it kind of just went from, you know, one passionate couple to another, which I was really, really happy to see. On the Zendesk side of things, I didn't feel as passionately that it had to be, you know, a passionate solo dev. And so that one went to like a group of investors that are just scooping up a bunch of smaller, smaller apps and things like that. Yeah, it was, it was really interesting though to see the different perspectives too, as far as, especially in the due diligence, like what financials they want and everything or it's the, you know, the passionate solo dev versus the investment group.

Yeah, I mean every buyer has different, you know, what they're looking for, what they want to see, different due diligence processes. What would you say, you know, if you could go back in time and, you know, you've been through two acquisitions, if you could give yourself any advice to make the acquisition easier or just, hey, heads up, this part's going to be a little difficult. Like looking back, what do you think that that advice would be? Or put it another way, I'll make the question easier.

Yeah.

If you had to give yourself, you know, three tips as you're, you know, looking to get these businesses acquired, what would they be?

Yeah, I'd say over explain everything in your listing. There's not going to be too much data available to people. So, you know, if you've got the exact, you know, monthly data, points of visits, revenue, everything. Like they can, they can break it out and look at it however they want. But yeah, over explain and give as much data as possible to help them slice and dice it in the way that's going to work for them. I did entertain, I'd say pretty well every request for a face to face call. And I wouldn't be too choosy. Unless you're, you're overwhelmingly busy. You never know what's going to come out of that discussion face to face. I maybe only had one that was like really not productive and shouldn't have bothered meeting, but if you've got the time, yeah, hop on with everyone and see what they are thinking, see what they have and, and it could be worthwhile.

Did my team share that advice with you or was that.

No, no, that was kind of me. Yeah. Because there were some. I was like on the fence. I was like, you know what, like I've got a 30 minutes, I've got the 45, let's just do it, let's just chat with this person. And they were always fruitful. You know, it gives you some new perspective or data point. It can help you with the other ones too.

Exactly. One thing I always like to say is, you know, assume everyone is the buyer until they're not, until they say they're not interested. Continue to follow up, continue to push for calls. And that's really like the biggest part with acquisitions that a lot of people I think Mrs. Number one, you got to be obviously prepared in terms of, before you go live. But you have to sell the business. You got to talk to people, you have to get to know them. You know, just as a buyer, they want to get to know you as much as they want to get to know your business.

Yeah.

So that, that's great advice. What's, what's the maybe the third fit?

Oh, the third one. Don't, don't hesitate or be nervous, you know, just, just list the thing. I think I was pretty nervous cuz I didn't know what to expect. But the absolute worst case is it, it doesn't go and you keep operating it. Whatever, you know, like you're, you're, it's gonna go fine. Just do it. You know, I like it.

Nike, just do it.

Yeah, whatever.

So in terms of you know, due diligence and asset transfers, did you have any sort of like issues transferring over like the payment system or domains are easy, but was there any like snags that you ran into that maybe held up due diligence or was it smooth?

It wasn't too bad. Like there are. You start to realize just how many accounts there were that you set up eight years ago for, you know, email notifications and all this other stuff. And then maybe you're on some super legacy aws account from 2009. It went pretty well. I think the biggest snag was maybe because I was Canadian, getting acquired by American companies, we couldn't just transfer the Stripe account because it's like set as a Canadian entity type thing. So we had to actually, like, switch over stripe keys and stuff, which wasn't as seamless, but for the most part, it. It went all right. Yeah, no big issues there.

Nice. Yeah, due diligence is, is. It can be. It can test you as an entrepreneur. You know, it can. It can go on for months, it can go on for weeks, depending on. On the buyer. But and then also the complexity of the business definitely, you know, affects how long it's gonna. Gonna take and the bumps that you run into. Well, it sound. It sounds like everything, you know, went fantastic. Is there any sort of, you know, I guess, advice you'd give to other founders looking to. To sell their business?

Yeah, I mean, if you're pretty organized. Like, I did all the bookkeeping, accounting, like tax filing and everything for them, so I had my finger on, like, the pulse of all of it. Did find some weird stuff, especially just with the way that the Zendesk, the Zendesk Marketplace integrates with Stripe through the API to manage all the subscriptions and everything. We found some bizarre, weird, phantom revenue in there when we were doing due diligence. That kind of shored up some things. But if you've got the finger, you know your startup better than anyone, hopefully, so you should be okay. You should know all the. The answers. Or you go digging, you know where to find it and the answers are the answers. Right? Don't, don't try to, like, hide things. It'll. It'll come out in due diligence. So I'm just. In that initial data dump, like I said, over. Explain. Just post all the raw data, even if you've got it and they can look at it as is.

Yeah, that's. That's great advice because one. One thing that definitely will blow up an acquisition, especially during due diligence, is surprises. So if you're not just entirely honest or even if there's just some part about your business that may not be great, whatever it may be, explain that up front because if it comes up As a surprise, the buyer is then left wondering, okay, what other surprise is going to come up? So transparency, like you said, I think is absolutely key to successfully getting acquired. So well done there. I guess my last question would be, tell me more about what you're working on now.

Yeah, so my wife, a friend and I, we run a rock climbing ninja warrior gym near Toronto. Been rock climbing since 2015. It's been like a passion hobby of mine. And then recently got into Ninja Warrior. So I think most people know American Ninja Warrior, the TV show, but there's also leagues that don't air on tv. So in Canada we've got the Canadian Ninja League and then in in the States and now worldwide there's the World Ninja League. So yeah, it's just a lot of training, a lot of community building and it's been cool. Rather than having, you know, like a tech impact at all the pools, just to have like a real community impact on a smaller handful of people, it's been pretty fulfilling. I'm having an absolute blast with it.

Nice. I like how you got, you know, online businesses to, you know, an offline business.

It was a bit scary because like the online businesses, I bootstrapped that. I spent like five bucks for the first server or whatever and that was that. You know, in a laptop it's a whole different ballgame. Signing like a 10 year commercial lease and building out like. Yeah, it's a lot scarier. The risks are there for sure.

The upfront capital is a lot, a lot more than five bucks to start where you're starting. Well, where can people find that? Do you want to share that? I can put it in the show notes.

Yeah, yeah. So if anyone's in the Toronto area, it's steelpeakclimbing.com steel, like the metal. I can help type it out for you later for the show notes.

Right on. Well, Justin, congrats again on. I wasn't expecting to hear about two six figure acquisitions, so I'm rooting for you, man. And best of luck with the new rock climbing business. If I'm ever in the area, I'll definitely hit you up for that.

Yeah, for sure.

All right, man.

Cheers. All right, take it easy.