Building and Selling a Niched Down Point SaaS - David Sorbara, Founder of BarkleyHQ

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I'm here with David, the founder of Barclay hq. He recently got acquired for high six figures. David, how you doing today?

I'm doing very well. How are you doing, Andrew?

Doing good. So to kick things off for people that may not know you, do you want to do a brief introduction of yourself?

For sure, yeah. I like the introduction you gave there. I am the former president and founder of a company called Barclay HQ and that was a SaaS business that I have been working on for probably about the last four and a half years, which was recently acquired in May 2023. Prior to that, I've always been working at other SaaS businesses, some large, some small, all different sorts of roles, the marketing side, sales side, client services side. But I've always had kind of the knack to be an entrepreneur and run my own business. Going back as far as I can remember, I was always doing entrepreneurial math. I remember just turning a teenager, my friends were getting jobs at the grocery store and then I would see how much they would make weekly and I would say, wait, if I can cut a few lawns, I would make more money in less hours. So I would do that. And that's exactly what I did. I had my first small landscaping business and then through high school and college I fell in love with technology which kind of drove me towards the SaaS world and that's how things kind of got started.

Nice. So you've been an entrepreneur your whole life, it sounds like pretty much, yeah.

I mean, I worked for other businesses for about, I would say, 10 to 15 years before having my own business.

And then, yeah, Mountain Royal spirit. I love it. So tell me about how you built Barclays. You, what was the, the idea behind it? Why? What made you decide to build this company?

For sure, yeah. So I always sat and I remember I used to sit in a 4 by 4 cubicle for one of the SaaS businesses that I used to work for. And I always just kind of thought of ideas and drafted ideas of my own app or SaaS business. And I was always kind of trying to find a niche market because I really liked the messag of going deep, not wide, that sort of thing. The grooming industry kind of fell onto me by accident. I adopted a dog and then I started bringing the dog to local groomers and I noticed that they were using pen and paper operate their business. So with my SAS experience and my entrepreneurial spirit, I thought, wait, there must be a better way for them. So four and a half years ago or five years ago at this point, I went online to see what tools were available for these pet groomers. If there's anything specific for that industry, there was minimal. And what was out there I didn't think had the features that they needed nor were they marketing it correctly. So I kind of jumped all in and started Barkley hq.

I love so some of my favorite businesses before we started recording, I even told someone I was like, I'm really excited for this one because I love Point SaaS solutions specifically for, you know, an industry. I've, I've never, you know, come across a SaaS business specifically for dog grooming businesses. So that's, I love that because it really hones in on, you know, the market that you're going after and it really makes a value prop really clear for customers because if you're a dog groomer and it's specifically made for them, you know, the chances of you building the best software for that specific customer is just so much higher. So now, now I'm wondering how did you get your first customers? How'd you get dog groomers to, to adopt this, this software?

Yeah, so actually before I think I even started developing this software, I just created some presentations and I actually went to the local groomers and sat with them and told them what I was working on. A few of them validated the idea. So then that's when I started putting the developers to work. I'm a non tech founder so I had to source the developers to actually build the product. So once I had enough validation from these local groomers, I started building the product. Actually, funny story, one of my best customers even to this date was one of the early signups. They had multiple locations. I didn't know that. I actually just went in there, dropped off like a little marketing package for the owner. Weeks later they got back to me. We met at a pizza restaurant because I didn't have an office at the time and they gave me their input. They said we love what you're working on because we're using all these different tools and it's just a mess with all of our customer data, et cetera. So from that pizza restaurant I literally signed up multiple locations and got to work. So they were really early adopters in adding what features it should have, what direction we should go in terms of the functionality of the software.

I love that I'm not technical too, so. So hats off to you because I, I know how hard it can be. Especially I love how you started with a design concept. That's always my first recommendation for non technical Founder and really just anybody design it first and then show it to people, if anything, before building, because you might be going in a completely wrong direction. So, okay, so you got the idea, you started building the product, you validated it, you got some customers. When was that moment where you feel like you really had product market fit? Did you have kind of a day or time where you thought, whoa, this is actually growing into, you know, significant business?

Yeah. So I would, I would say when I went all in was after that meeting where the big business validated my idea. But even before that, just the feedback that I was getting from the local groomers in Toronto and north of Toronto, I kind of knew that I was on to something here. And they were kind of even like giving me their pain points with existing softwares they've tried, what softwares they're using that they've kind of mutated to work for their business. So I really built a close connection with all of my clients, especially early on. So I kind of knew I was on to something. I would say once I passed the 25 paying customers, that's when I was like, really confident that, you know, this thing was going to go full steam ahead.

Nice. And just out of curiosity, I'm not a dog, not the dog growing business, but what are the main pain points that your company solved?

For sure. Yeah. So the big one was we replaced the big paper calendar by having a digital calendar. So if you walk into a pet grooming business, chances are some of them are still on these big paper calendars. But that's hard for a groomer to manage their business because if someone calls or messages them on Facebook, they want an appointment time, the groomer has to go to that calendar. So if they lug it around with it was really the digital calendar first, then it was a CRM tool. So you'll notice that these pet groomers who are running on pen and paper, they had these paper cards and they would have file cabinets and they would go and look up the client's history. So just a big mess of paper everywhere. So we were the CRM tool. But then I also even came up with the phrase prm. So CRM obviously stands for customer relationship manager. But because groomers, clients are pets, I called it a pet relationship manager. So attract the clients and the pets details like breed behavior of the pet, size of the pet, all sorts of things.

I love that. That's. That's clever, Margaret. I'd say the pinnacle of marketing is when you can either have a company name that's a Verb. Or you make up some acronym that is adopted within the industry. I think that prm. Pet Relationship Management.

Yeah, I had it on the website, social media, I was using that term and the groomers loved it because groomers actually remember their clients by their pet name. They know more about the pet than the actual client's first name. So it was kind of a fit for what we were doing.

Interesting. So the customers would actually know the pet. Would they enter the pet name in the. I'll go with this. The prm.

Yeah. So it could go either way. So if they end, they could enter the phone number that they see that called, they can enter the client's name, they can enter the pet name and then that record would appear and then they can book it in the calendar.

I love it. Let's move on to the acquisition. So why did, like, when did you have the moment where you decided to sell the business? What. What was that like? Was it something you always had on your mind? Was it a day you thought, hey, I'd like to cash my chips? Was the thought process behind that?

Yeah, a little bit of both of those. I kind of started the business with always wanting the end goal to be getting acquired. I just thought that'd be super cool to have on the resume and to go through that process. Did I think it was going to happen in four and a half years? No, probably not. Once I got to the company to a point where I was like, okay, I could make pretty good money if I let go of it now. That's kind of why I decided to sell. It was also at the point where I was kind of. I think I burnt the. Burnt the candle on both ends. I was kind of burnt out myself, working very long hours and etc. So I was like, okay, I think it's time to put this company in a different founder's hands or a different company's hand so they can run with it and take it from so 0 to 100, from 100 to 1000, they can do.

Nice. I love it. That makes a lot of sense. So how did you prepare for the acquisition? What did you do to make sure that, you know, you would actually get to a success by a position? Because a lot of founders try. But is there any sort of preparation that you did prior to increase your chances of getting acquired?

No, I think the whole development of the business kind of led to that direction. Like, it was a super niche SaaS business in the pet industry. So there was a lot of things that make it super attractive for someone to want to acquire it. But that was all by accident. I didn't know anything about this up until this point. I kind of learned it going through the process.

Nice. One thing I will say, just for other people listening point. SaaS solutions like yours, like a SaaS solution specifically, it could be like an invoice generator. CRMs. CRM specifically for a specific vertical get a lot of attention. So now I'm interested in hearing. Okay, so you go live on acquire.com what was your first impression? What did you, what did the first two weeks look like when you went live on the marketplace?

I was busy on acquire.com for sure. A lot of interested parties for the business. It was like a full time job just fielding their quest and answering the questions. But yeah, I mean, obviously there's some buyers that aren't serious, some that are super serious. So you just kind of have to learn how to ask the right questions and vet who's coming through that sort of thing.

Nice. How many NDAs did you end up receiving?

If I could remember, upwards of 80, I think. I'm just guessing though.

Dang. How many buyer calls did you have? How many different buyers did you speak to?

30 to 40. I would say half of the people who signed the NDA.

Oh, wow. Yeah, yeah. So I had an inkling that the attention or the interest within your business was going to be high. So I guess now how did you. So that's a lot of attention in terms of buyers reaching out, signing NDAs calls on your end. How did you land on the final buyer? What made them stand out out? What made you comfortable moving forward with them? Was there anything in particular that made you comfortable to sell the business to them?

Yeah, because a lot of the offers were the exact same. So I was really looking for a founder that would put as much passion into it as I had at the start. Also somebody who had, I guess, complementary skills or even better at me in some areas to really make Bark bleachq successful going through this process, like I said in the beginning, I was really close with all of my clients so I wanted to make sure that they were well taken care of. So I was really looking for someone who would put like a big effort into client services. I really wanted someone who is going to have funding for digital marketing, all the things that the business needed to go to.

Nice. I like that. Yeah. Because within acquisitions there's always you. In my opinion, you need goodwill. Like you need to get along with the buyer. And if you have, I always tell this other entrepreneurs that I work with. But if you have three identical offers, the one I recommend going with is the person that you feel the most comfortable with. Because my next question is, you know, around like due diligence and stuff like that. Like, once you sign, that's kind of just the start of kind of the harder chapter of the acquisition process. So I'd love to hear about how did due diligence go? How did you transfer the assets? Did you use escrow? And then just how did it go? Post letter of intent signing?

Yeah, we used lawyers to help with this transition. We used escrow from the lawyer going through due diligence. You know, as the founder, it's super scary because you're like giving someone access to your entire financial and business life. So you want to be comfortable with the person who you're giving access this to as well. Someone that you can trust, because there's a lot of sensitive information there. I felt like our due diligence went pretty smoothly. It's a pretty simple business. The expenses were low. I use Striped QuickBooks everything to track everything like that. So they were able to go through due diligence very quickly.

Nice. Any. Any tips you would give founders that, you know, maybe looking to sell their business learnings that I assume this is your first. This is your first acquisition, correct?

That's correct.

Yeah. So you came in this not knowing what to expect, or maybe you did, but if you could go back and have someone tell you like three pieces of advice, what would that be?

Actually, it's interesting. The last year of the business ended up being performing so much better operationally, and I completely give cred it to having a P and L. So my advice for any founder, whether you want to sell your business or you just want to have a business and run a business, day one, you open up an Excel sheet and you start tracking with a P and L. Because this is going to allow you to track your income, your expenses, where you're spending money, where you don't have to spend this money. And things drastically change when you can actually see it all across the Excel sheet or Google sheets, whatever you're using. But having that P and L is a big thing for sure. And it makes it easier if you do want to get acquired because you already have all that work done.

I would, I 100 agree. I would go as far as saying that having a P, L, if you're looking to sell a business for six or seven or definitely, you know, in the millions, is required, 100% required. And I, for me, I love that advice because actually the one of the first hires@awaring.com was, I hired back my old CFO because it's akin to like driving a car at night with your lights off. And it's really hard to predict out your growth, where you're spending. And just that one hire alone, I think people don't understand it could be a part time controller, it can be a fractional cfo. But these hires are good investments in your business because you'll see a return. So whether it's when you're selling your business, you'll get goodwill from buyers because they can understand your business easier. And then you can also manage your, you know, the capital you have on hand to make sure you're growing at, you know, a sustainable rate and you're not spending $3 to make $1, if that makes sense.

That's right. And actually it's funny that you brought up the hiring thing. I would say that was probably the biggest learning curve for me with my business is I think I hired too late. So my next business for sure, I'm gonna hire a lot earlier. Rather than trying to do everything yourself, bring some talent in, get some new eyes, and I think that investment will pay for itself.

Every entrepreneur has that mistake. So a small story at my, I had a previous company and we just had a controller. We closed books and you know, that would be that. And I would actually manage expenses using the Mint.com mobile app. I would just see cash coming in, cash coming out. Super simplistic. No financial modeling in terms of, you know, we had a sales team at that point. It was just very, I was young too, so I didn't know, but mentor just told me like, please hire a VP of finance. Like, and then once I started working with one, I was like, oh, okay. Now I look at the business entirely different. Yeah, let's not, let's not invest in this area because it's not, not profitable. It's moved like, it just, it allows you to see the business in such a different angle than if you're looking to scale the business. It just helps so much. I love that feedback. So congrats on, on that acquisition, David. You did it, you got acquired. You know, super happy for you. But entrepreneurs never really stop. So my, my next question is, what are you up to now?

Yes, I'm actually working at another startup company I just probably started about two months ago called AB Smartly. And I'm their head of market there. And what they have is a platform that allows companies to set up a B tests and track and analyze all those metrics. So that's currently what I'm doing. I'm the head of marketing there.

Nice. So I guess from here, any other plans to start another company? Are you gonna kind of wait a little bit until you get another good idea?

Actually, I kind of want to go the other way this time. I think I want to acquire a smaller business, maybe something pre revenue, and then see if I can apply my. My skills to it, to build it and then sell it again. But coming up with the idea is the hard part. So that's kind of why I want to find something that someone's already developed, maybe has a little bit of customers or pre revenue, and take it over from there.

I know a really good website you should check out if you're looking for businesses to buy is.

Which one is this?

It's called acquire.com. you should check it out. Yeah, yeah.

Actually, I. I'm part of it. Yeah, I know it.

I'm joking. Well, David, it's been. It's been a pleasure hearing your story and congrats on all the success. I love the business, love the story. If you want learn more about you or reach out to you online. Where can they find you?

You can find me on Twitter and LinkedIn. On LinkedIn, it's just David Sabara and you'll find me on Twitter. It's David M. Sabara is my handle.

Awesome. We'll put that in the show notes. David, thanks so much for coming on the podcast and congrats again on the acquisition.

Yeah, no problem. Thank you so much for having me.

Yeah, cheers.

Bye.