How to Prime Your Business For a Seamless Acquisition with Sukhpal Saini

Foreign.

I'm here with Suck, founder of Engine AI Suck. How you doing today?

I'm doing good.

Yeah. Thanks for joining the podcast. For those that may not know you, do you want to give just a brief introduction of yourself?

Yeah, for sure. So I'm a founder from Toronto. I actually started off my career as a Full Stack Dev, Full Stack engineer. So I was never a good employee, always building stuff on the side. And now I've just quit Full Stack development and just started doing more founder stuff.

Nice. Tell me about retail that got acquired on acquire.com. tell me what does it do? What problem did it solve?

Yeah, so retail R, E, E, T A I, L. So you spell it. I got the domain pretty cheap on that because of the misspelled spelling. But so retail, what it is, is a mini shopify, but it's for Stripe users very specifically. So the problem with Stripe users is you can always create products on Stripe, but you can create an e commerce platform, E commerce shop out of it. So if you've used Stripe before, you create a product link, but then if you have 10 of them, you gotta send them to your customers one by one. This app, Retail, would convert that into an e commerce store. So you can have all your products in Stripe, but your customers can browse on it and have a checkout and do the payments through that as well. Mostly for dentists down the street who's selling a few things. Maybe a school that's selling some T shirts, but that's where the customers that we had were.

Nice. How did you find your first customer? Retail?

Yeah, so that's a very easy question. And that was the question I was, I had built a bunch of startups and did, you know, didn't really get customers. So I was like, I need to find some way of like automatically getting customers. So what I did was so Stripe actually came out with a Stripe app marketplace. So it's similar to like Apple App Marketplace. You can have, there's a bunch of apps, apps and Stripe users can click and like search for the apps they want to do and then I click install. So that's how I got the first customers. I actually didn't even go out and find them. I just listed in the app Marketplace and a few people downloaded from there and I kept getting about five to 10 people a week just organically searching up for the, for that kind of e commerce app and we would show up and then they will install and start getting used.

Nice. Why do you want to sell the business?

Yeah, so I was running it for about two years, fully bootstrapped, I was the only dev working on the business. And it was, I started off by being like, okay, let me see if I can build a mini Shopify. Shopify is this big. Even if we got, you know, 10% of that, that'd be great. But when I started selling, I realized that the market or the folks that I was sort of selling to or the. Where I found the most product market fit were, you know, again, somebody, a teacher who's doing a bake sale or a dentist on the street. Those folks don't actually have a lot of volume of sales. And so if they don't have a lot of volume of sales, they're not going to spend a lot of money on a tool that helps them sell. And so because of that, I found the ltv, the lifetime value of a customer was very low to the point where it's not going to be that massive success. So when I, when I sort of started realizing that it was going to be a lifestyle business and I ran that for a little bit and then at some point I had tried all of different ways to grow that lifetime value and I couldn't do it. And I was like, hey, I think this is a natural end to like my capabilities of where I can take this business. So it's time to sort of exit out of that. And in parallel, I was building another business, which is Engine, that was a VC backable sort of like business. And that had started to, to ramp up a little bit. And I was taking more and more time away from Engine to work on this thing just to do the upkeep and it didn't feel right, you know, to not do like bug fixes and stuff like that. And so I decided to put it into someone to give it to somebody who would, who would take care of it a little bit more than I was.

I think that's the best time to think about selling when you feel like you've taken the business as far as you can go and you can sell it to someone that can breathe some new energy into it and be really excited about it just being, just being a lifestyle business.

Yeah, yeah, absolutely.

Tell me, what was your expectations when you first listed it on acquire.com so.

I actually knew about Acquire when it was micro Acquire a long time ago. And I interviewed for the job role as well as a react engineer back in the day.

I saw that on LinkedIn today. You calling that story out, that's awesome.

Yeah, yeah, yeah. And I was, I realized that I didn't know how difficult the process or I didn't even know the first thing about selling a business. So I didn't have any expectations. I had already created an account, but listing it was, I was like, I need to do like get a bunch of numbers, like see what I have to do. But it was pretty straightforward. I just connected my Stripe account and I wrote up a little blurb about the business. And I think what helped the most was that we were featured a bunch of times by stripe. So our usage numbers looked really, really good. So I thought we would get some attention, but I didn't real. I didn't think that anything would come out of it. It was just more of like a pulse check in the market of like the multiple that I'm thinking about, which was I was thinking, you know, a SaaS business about 4 to 5 to 6x. See if I can like check the market and see if I can like sell it that way. Um, and see if I could bite. That was the only intention behind it. And I was very surprised because a lot of people reached out to me afterwards.

Nice. Do you remember how many buyers you ended up speaking with through that whole process?

Yeah, the NDA. I think there's a bunch of different stages. Right. There's one where they, you designed the NDA to look at your, your data room or like the spreadsheets that you provided. I had about 30, 35 people look at that and three were serious offers and one was all cash and it was the exact price I wanted. Immediately took that and kind of just like, you know, call up my, my family, like, hey, I did it. I did the first one right on. So that's what happened. Yeah.

Nice. Tell me about the conversations leading up to the offer. Like how did you know this buyer was serious and they were gonna give you an all cash offer? Was there anything that gave you that indication or did the offer just kind of come in? You were surprised by it? How'd you get there?

Yeah, so when I remember this was during a two week time frame and I was already in discussions with a couple of people and three people that. So, so people would come in and sort of ask, hey, you know, what are the numbers? Like show me the uses numbers. Show me like install numbers and churn numbers as well, which I didn't have kind of like handy. So I ended up creating those, those pieces. But the right kind of buyers kept coming back with questions and I would answer and then another question would come up. The folks were there were like a little bit more window Shopping where hey, you know, tell me more about the business. And then you know, you send a couple of bullet points and then that's kind of like where their interest sort of like slows down. The folks that were interested were already in the payments e commerce space somehow. So the right buyer actually had a WordPress plugin. And so you know, you have a WordPress plugin and this is a stripe plugin. Both are working with payments. It just made the right sense. So, so that was the all cash offer which was like, and by the way, I had listed it for 3x so way below the, the 5 to 6x and just because I had a couple other priorities and I wanted to, and I, I selfishly I just wanted to like, you know, I knew I wasn't doing a good job so I wanted to like make it as attractive as possible. So 3X. Yeah, this person, one person came out and said I'll do 2x and then the rest in consulting afterwards. And it's always tricky with these kind of offers because how are you going to chase somebody after the offer is done? I like, you know, like you can just turn off a Gmail and, and be off your, you know, go away. So I didn't feel comfortable with that totally. And then fortunately another buyer came in and said, hey, all cash today. I just need a little bit of time to, you know, if you can help me transition over. That really worked. We got on a few calls and I was like, however much time you need for me, I am more than happy to do that for you.

That's great. I mean you can kind of expect most buyers to asset in some capacity like some sort of transition plan because you know everything about the business, you know how the source code works, you know the, you know, unique payment plans that customers are on. If there's any like discount codes you may given out randomly. So just having you available even for a couple weeks, ideally a couple months is huge and it de risk acquisition and other buyers can get interested. So that's awesome. Tell me this, how was, how was due diligence? How was going through the process of transferring over all the assets or having the buyer review the financials and the source code? Was it quick? Was it difficult? Was there any snags?

Yeah, it was quick. So around the time when this acquisition was going through, I was also going through techstars and I did techstars in Columbus, Ohio. So there was a lot of, I was dealing with a lot of paperwork just from, from that work. And this was surprisingly, I guess it's intense at the very start when you're trying to get all your accounts because you don't document them as you're building software. You just kind of like go in, download the software, pay for it. You'll. You'll see day like, you know the billing is coming in, and then you have to go in and check if that software allows for a team member to come in so that you know you. So the buyer kind of like gets invited into the same workspace as you into the product, and then you sort of like leave the workspace and then like, that's the way the payment. Sorry, that's the way the handoff works for the softwares. So I made a sheet of all the software. I knew that I was paying for how much it was, that sort of stuff. So that was one sheet. The other sheet was a direct stripe export from the very first payment I took in all the way to now. And all of the pricing shifts I did along the way as well. And I had it annotated. So that really helped the buyer understand, okay, this period was a time, and he did this type of sale here, and then this type of sale here, this type of sale here. Because. Because all the buyer really is looking for is like, can I understand what has already been tried in the business and does it look legitimate enough? And so that was the other thing that I provided. And then the last thing was just Google Analytics data of like, hey, have you done an SEO work? And what do the numbers look like on a monthly basis? And what does the conversion rate look like when the person does show up on the page? So those were the couple of things I provided super quick. Had a call to just dot the eyes and cross the T's and that, you know, it looked. Everything looked good. And then he moved the money into the escrow and then we go went on from there.

Nice. Sounds pretty straightforward.

Yeah, no hiccups. Nice. No hiccups. Yeah.

I mean, congrats. It sounds like you had a smooth acquisition, you found a great buyer. Due diligence wasn't any headaches. If you had any advice for other founders that are looking to sell their startup, maybe the top three learnings, what do you think they'd be?

Yeah, top three. So my top one is actually to do a lifetime deal with your customers. Because what happens is, I mean, a SaaS multiple is like a 3x or like a 4x 5x. And that's great, you can get some customers, but you always have people sort of coming in and leaving and Then your multiple keeps like going up and down or like your revenue numbers a monthly keep going up and down. So you might one month, you might have 4k a month revenue and that would mean at 3x, that means 12k. Next month people could leave and now you're back at 2K. So you're always playing this like back and forth of like this month I could get this much money. This much I could. But get this money over and over again, especially at lower revenue numbers. One tip actually is to do a lifetime deal. Have some, some customers come in and those customers can then hopefully invite more customers that are paying higher amounts and that will get you that initial burst of users that are paying and can bump up your revenue multiple. So that's one of them. Number two is always create separate accounts for all your products. It's hard to do, but Stripe lets you have a separate account, like you know, multiple accounts in your organization. So you can have a single product and then, sorry, a single account for this product and then all of the things the subscription prices are going to sell in it. It just makes it super easy to transfer the accounts over, especially if the buyer is from a different country. So my buyer was actually from the US I'm in Canada and there's some legal stuff where a US person has to do some stuff to like get the Canadian Stripe account. So there's some like complication there. So just having separate accounts means you can just pass off the logins off to your new buyer. And the last one is have three great bullet points of why somebody should buy the business. I had that we were covered by US commerce, like the government, actual government like blog article on like what software to use for E commerce people. So that was a great like bullet point to be like you want to buy this software because like you know, we've been listed here. The second one was that we were featured a bunch of times by Stripe. The third one was that there needed to be no top of funnel work done. And so like those three bullet points, if you put that into a listing, it just makes it automatically no brainer for somebody to buy. So you want to like have those three bullet points thought of like roughly. You want to be cognizant of that. So you're building towards those three bullet points just because it makes the discussion so much easier and it makes a business look much more attractive as well.

Nice. Yeah, I like that last point. In terms of having like standout reasons to buy the business. One thing I've seen a lot of founders Doing lately is adding like risk and limitations, basically reasons not to buy the business. So that can like build trust with buyers that can, you know, outline very quickly what a buyer is probably going to find out anyways, what's wrong with the business, why, you know, they should be concerned or what a risk could be because every acquisition has some risk on it. So I like that. One thing I, I might change with what you said though is the first point. Lifetime deals can actually work heavily against you and acquisition because as a buyer you're essentially taking on these users that are free users. They're not paying any revenue and so sometimes that can actually dent your valuation depending on how many free buyers you have or lifetime deals that you've sold before. So just watch out on that. If like, if we see a startup that has done a lifetime deal subscription, we almost always, you know, it's kind of like, ah, shoot. Because buyers will specifically look for that as a red flag. There's a small call out there. It's, it doesn't ruin everything, but it's not, it's good to get the upfront revenue. You can do that to fuel further growth. That's the way to do it. But if your only business model is lifetime revenue or, you know, you don't have a lot of recurring revenue, it's going to be a challenge.

Yeah, I think, I think that makes sense. If like you don't want to always be like the whole plan shouldn't be, we're going to keep doing lifetime deals. So.

Yeah, definitely not. No.

Yeah. And the other thing by the way is I think if it's a software where like there's some cost to it. So like if it's a product and you know every call somebody makes, it's going to cost you and you're selling a lifetime deal at 50 bucks. Just all, is all, all the software. Yeah. Then you're putting yourself at risk because that person can come in and like do a thousand dollars worth of AI calls and now you're, you're, you're doing a negative. Yeah, yeah.

I bet some companies are going to run into that.

Yeah, I actually know a couple customers, sorry, a couple of founders that have like done those kind of like deals in the past and now they have to like pay the price of that. But I think if your software is like for example, ours was like an E commerce store. So like having a customer that doesn't do anything or like even if they create a million products, it, the, the value is like, or the cost is only the Hosting. Maybe it's not that big of a deal, but probably like the, the thing to be careful of there.

Yeah, no, definitely. I think it's, it's case by case, but those are great points. Definitely with the, the AI bill that doesn't get out of hand.

Definitely. Cool. Tell me about you. I was just gonna say. You were saying, you were saying about.

About your story or find you online. Where can they find you?

Yeah, you can find me on LinkedIn. It's LinkedIn. My username is SSS Aini. Or if you just search up supposini on LinkedIn, you'll find me.

I can put that in the show notes too. Well, suck. Congrats again on the acquisition and, you know, hopefully I can get you back on here with your new startup.

Absolutely.

All right, cheers.

Yeah, awesome, man. It helped B2B companies create SEO with AI, just so, you know, create more blogs so you can get more visibility. But I pivoted out of that and I can go into why I pivoted out of that into now helping founders build personal brands on LinkedIn. And not just founders, anybody who's a salesperson. So this could be, you know, a lawyer who sell their services or a founder or like a sdr bdr. But I think where the industry the go to market is going is to more authentic, expert driven sort of like sales motion versus how many cold emails we can send out with AI personalization in it and see how many like people we can like hook with that. I think that's kind of like on the way out now. So that's what I'm working on. About two months into the pivot, things are looking much better.

Nice. Congrats, man. Well, that's all I got. You know, huge congrats on the acquisition. I'm excited to see how far you take engine and I guess if people want to hear more.