SaaS Acquisition Stories w/ Andrew Dumont, CEO of Stamped

Foreign. With me today I have Andrew Dumont, an operating partner at Tiny Capital and currently CEO at Stamped and former CMO at Bit Ly. Andrew, fantastic name. Thanks so much for joining me.

On you as well, man. Yeah, you bet. Thanks for having me.

So let's get the important stuff out of the way. First is a hot dog. A sandwich.

Man, I've been thinking a lot about this one. I'd say no. I'd say no. What about you?

Surprising fact. Webster dictionary actually classifies it as a sandwich. Really?

Yeah. Okay.

Yeah, there we go. I learned that this week.

The hard hitting stuff. Yeah, yeah.

That's the hardest question I'll have for you. But for those listening, do you want to just give. I gave, you know, kind of a brief background on yourself. Is there anything you wanted to add to that?

Yeah, I mean startups have kind of been what I've devoted my whole career to. Started when I was about 18 with a startup that we started. Have since jumped from a number of companies, San Francisco area, New York, back in Seattle. Now have done quite a bit of angel investing as well. Invested about 20 companies there. So yeah, my whole career really has just been kind of all around startups, venture funded, acquired startups, bootstrap startups, kind of have been a part of it all. So I have a super dynamic set of experiences here from the operating side and investor side now as well. So yeah, it's pretty good summary there.

Nice. Starting early 18. Sheesh.

Yeah, yeah.

So how did you get involved in operating an acquired business?

Yeah, well, I was at, in New York City, I was at Beta Works, which is kind of a startup studio model. One of the first companies that have kind of done that build and scale within the company type model. So I was at Beta Works for a number of years and one of the companies that they started was a company called Bitly, which I'm sure most people are familiar with. And Bitly was interesting because it was a venture funded company that kind of blew through a lot of the venture capital needed to become a sustainable, scalable business. And I hopped over from Betaworks to Bitly and I saw a lot of that, not necessarily post acquisition, but that transition from venture scale to sustainable, profitable business. And I really love that process of taking it from where it was that was not sustainable to sustainable. And some people kind of see that more boring than the rocket ship venture stuff. But I really loved it and I love that operator's mentality within that. So that's kind of what got my mind on this direction. And then once I was done at Bitly. A buddy of mine, Andrew Wilkinson from Tiny, you know, was kind of had been acquiring businesses for quite a while and he had two companies that, you know, he needed an operator to come in and jump in on. And I started taking on those two businesses and I ran a few businesses for Tiny now and I just loved it. I love the reps, I love the experience there. They're similar, but they're so different as well in terms of the levers that you pull as an operator. So yeah, that's what kind of got me shifted to this side and I've really enjoyed it.

Nice. And so you're currently CEO of Stamped. What does Stamped do?

Yeah, so Stamped does reviews and loyalty for e commerce brands, mainly on the Shopify ecosystem, but supports a lot of different e commerce platforms outside of that. So yeah, one of the more broadly used reviews platforms for e commerce sites recently introduced Loyalty. Starting to kind of build a suite of products for e commerce merchants that are building on Shopify and beyond that.

Nice. So a lot of people are acquiring businesses today as you know, including Tiny Capital and another number of other firms. And a big part of that is you acquire the business and there's a post transition period. How? This is a broad question, but, you know, how do you successfully transition and operate a company after you acquire it? How do you think through that?

Yeah, well, actually a lot of it tends to happen on the pre acquisition side or at least kind of avoiding some of the pitfalls there when it comes to the business that you buy. You know, I think a lot of people just kind of rush through to get the deal done. Tiny does a really good job of being very deliberate with the stuff that they buy and doing a lot of work on the front end. So, you know, when it comes to pre acquisition, you know, I think about things like, you know, proper technical audit, you know, being super deliberate with whether the team needs to carry on with the company or not. And if they're not coming with the product that you're acquiring, you know, what sort of access do you have? The thing that's been broadly true is that there's always stuff that you find out after the fact with an acquisition. And if you don't have access to that team or kind of the institutional knowledge for that product, it can become really difficult to find a solution there. So, you know, that's a big thing. You know, I think about the kind of diversity and sustainability of the growth that that product has. You know, what are the customer acquisition channels, you know, where Are they coming from, how sustainable are they, you know, are they relying heavily on paid, are they relying heavily on organic, you know, things like that at the pre acquisition stage, you know, you can kind of figure a lot of stuff out, you know, once you get the product in your possession and you kind of have to start thinking about operating it going forward. You know, I think of a few questions and it all comes down to focus. You know, I try to find like what is on fire, like what needs to be fixed right now, you know, what can wait but is a kind of high priority, you know, where's the opportunity, you know, for growth and kind of the next stage of the business. And then, you know, what people process, you know, are missing and you know, how can I use kind of the existing folks within the business if they did come along with it, to kind of take it forward? So there's a lot there. It's a super broad question, obviously, but it definitely rhymes a lot from these acquisitions and what it looks like post acquisition. But I think you can get ahead of a lot of it. On the pre acquisition work.

You kind of took away my second question, but let's dive into that a little bit more. What are some common mistakes you think entrepreneurs make after they acquire a company and you know, they're thinking about post, you know, transition with the company. You mentioned that, you know, best practice is obviously to do that up front before you acquire the company.

Yeah.

Is there anything in addition you'd add to that that you've seen as mistakes or maybe mistakes that you've made in the past or things that could easily be avoided before you acquire the company?

Well, the technical audit's a big piece. I find that generally folks kind of rush through the product that they're acquiring and not fully understanding the technical debt that exists within the business, if there is any. And in most cases with software, there typically is. So that's a big thing. You know, Stamped was a good example. Stamped had a ton of momentum behind it, had some challenging, you know, sort of infrastructure issues. But the big thing when I took over that business was continuation. Right. Like leaning into the momentum that the business already had. So I think the biggest mistake is people take over a business and they feel like they have to scrap everything, you know, just get rebuild everything. And in some cases that's not needed. Like you need to continue the momentum that exists and start building the missing pieces, you know, that exist within the business. Within Stamped specifically. It had this great organic side of the business, but it was missing a proper sales Org, Success. Org partnerships or all of these kind of new opportunities. So it was continue with what worked so well and kind of lean into that, but start introducing these new items that would kind of take it to the next, next stage, next level.

I like that. So you, you definitely, you know, you double down on what's working, but then you also identify, you know, enough additional new, you know, opportunity levers to pull to kind of continue growth of the company.

Yeah, and they almost, yeah, and they almost all have, you know, additional growth levers that you can pull. Some more obvious than others. But you know, typically when somebody is selling a business, it is not fully optimized. So I think the thing that has been obvious from each one of these companies is there is always opportunity because either that founder doesn't have that experience. I see a lot of this stuff on microapplier, the people selling it in their notes, they kind of say, I don't have a marketing background, I don't have a customer acquisition background, but they built this great product that functions really well, solves the problem, has a bit of product market fit and then it's just figuring out, you know, what are the opportunities, what are the most efficient opportunities, what are the most scalable opportunities that exist. And there are always some.

I love that. I think that's, that's one of my favorite things about Microquire is, you know, there's, there's builders and there's, you know, scalers like yourself where some people are really good at that zero to one phase, just getting the business off the ground. Then there's, you know, awesome people named Andrew like you and you and you. Yeah, that can come in and, you know, take the business a little farther and then, you know, even though the founders sold the business, they get to see it, you know, reach new heights, which is always awesome to see.

Well, just on that real quick, Andrew, I think it's, I think it's important for people that want to buy companies and startups to, to define what type of person that you are. When I was at Beta Works, which is all from zero to one, like building a product from, from zero, trying to get product market fit. I've been through that cycle a bunch and I didn't love it as much as taking something that had product market fit and scaling it. So I think it's important for people that, because it's kind of, you know, thanks to Microacquire, it's more accessible to go buy companies now. But I think it's important for you as a person that could be acquiring it or company that could be acquiring these businesses. Do you want to operate these businesses? Is that what you're really good at? Is that what you enjoy doing? Or do you enjoy the zero to one of starting an app or starting a company? And if that's not, you either don't buy them or go find people like me or other folks that can take these and scale them and love doing that work because it's different kind of work.

Yeah, I couldn't agree more. And then, so you've been through this a few times. Is there any, you know, stories that kind of stick out to you in terms of like a successful, you know, post acquisition strategy that you wrote out? I know you touched on one, but is there maybe a story or another company that comes to mind of a successful post acquisition transition?

Yeah, I mean I, I, I think Stamped has been super successful but I, I'll kind of, you know, skip that one because I, I covered a bit of it there. I, I took over a company called Meteor.com, which Tiny acquired, which was an open source product, JavaScript framework. And that was an interesting one because I, you know, I don't have that background but it speaks to just kind of the consistency in the type of opportunities that you see after you acquire a business. With that one specifically a team did not come with that product. So it was, you know, just the company, you know, it had an open source component. So when I thought about that I thought about, well, I don't have a technical, you know, desire to go and build this framework and work on the open source side. So the first hire that I made was a dev evangelist who came in and filled that strategic need for the business. There was a ton of opportunity in pre committing on AWS and kind of reducing hosting expenses which was one of the primary OPEX components of that business. Ton of opportunity on introducing a better, different pricing model for the software business on Meteor Cloud and then introduce new kind of marketing channels which were non existent for a developer framework. So you can kind of see it's just like step by step you kind of break down how does this become stable? How do you get the right people on board? And then you start going through opportunities both on the expense side and on the growth side and it's just kind of piece by piece there.

I really love the comment you made there just about especially just like your ability to recognize what you don't know. Yeah, you know, it takes a team to win. So you know, you hire people that you know are more Versed in maybe an area that. And I think that's one of the most important thing for an entrepreneur is understanding what you're good at and what you're not good at and then being able to recruit people to kind of, you know, help with areas that maybe you don't have expertise in.

Yeah. So that's all I think. I think it's interesting or it's important to note as well, like what you're trying to optimize for when you acquire a business. Are you optimizing for earnings or are you optimizing for growth of the business? You know, it's. Ideally the answer would be both, but that's, you know, there's a bit of a trade off there. So I think something that tiny does that's really smart is they acquire companies that are already profitable, are growing consistently, not exponentially, but they have a good growth rate. And that's always the balance as an operator is how much do I want to invest in the business versus taking earnings out of the business. And it's important to note what stage the business is in in terms of earnings versus growth and what you're trying to lean into. That's kind of the tug and pull always with operating. That is not necessarily the case with venture funded startups. You're not making that decision as actively as you are when you're operating.

Yeah, I like how there's more optionality in terms of, you know, when you. Because the company you're referencing, wasn't that a company that was a carve out from a venture?

It was company, yeah. Apollo. Yeah.

Yeah. So they probably would have just shut that company down. Then you pulled it out and then pulled the team together and it sounds like it's doing awesome. I love that.

Yeah, yeah. And you know, to, to your point, like it. It didn't match the model of that bunch of ven. Venture funded business, but it was still a great business. You know, it. And to your point, like I don't know what they would have done with Meteor. Um, but yeah, it was like one of those things where do we shut this down or do we hand it off to somebody who can take it and continue it forward? Um, so yeah, there's. There's a lot of opportunity like that.

Nice. I love that. So you've given a lot of great advice, but if you had to give just one piece of advice for entrepreneurs looking to acquire companies and potentially operate them, because a lot of the companies that are being acquired today, which really wasn't happening too much, I'D say a couple years ago, or maybe it was, and I'm getting this wrong, but you know, you're essentially buying a job. Let's say you're buying like a million dollar business and, you know, enough profit to essentially just replace your salary or whatever it may be. What's like one piece of advice you'd give to entrepreneurs like that? Because some could maybe jump in heads first without too much of a plan. Maybe I'm giving away your answer already, but if you had to just give like one or two pieces of advice for an entrepreneur kind of, you know, looking at businesses, you know, in that realm where they're going to be stepping in as operator, what would that be?

Yeah, well, I think, I think it goes back to what you're saying and kind of what I alluded to before, which is like, is that the job that you want? You know, to your point, like an entrepreneur, they just kind of see this opportunity and they jump in and they buy themselves a job which maybe is not the job that they're very good at or they enjoy doing. So I think it's important to note it's different than starting a business. It feels different than starting a business. So do you want to be in kind of the, what I call like the tweaking phase, you know, where you're just kind of like taking something that has product market fit and you're trying to scale it, you're trying to tweak it and get it to the place where it's growing in a great business and a long term business. A lot of people don't love that work. So I think the first question is do you want to do that work? The second question is probably, if not, should I still go buy this business? And if the answer is yes, then maybe I could look at an operator hiring somebody to come in and take that job for me, somebody that likes doing that work and is well suited to do it. So I think one of the things Tiny does really, really well, and this is a whole nother discussion on how do you compensate correctly for operators, aligning interests for people that come in and take a business and operate them as a CEO with you as the owner. So yeah, it's just kind of just making that decision, doing that reflection on whether it's something you want to do.

Yeah, I love that. And I'm always a big proponent of, you know, if, if you're working on something and every day it's just like a struggle and it's just like a headache, you probably bought the Wrong business, probably about the wrong thing. Yeah, yeah. You want to find something that, you know, aligns with not just your skill sets, but also something that, you know, you're excited about. So I, I really like that. So, so kind of wrapping up, you know, this, this podcast here, any, any books or like podcasts that you recommend to other entrepreneurs to maybe ones that you know have really influenced you or just classics that you recommend every entrepreneur's reader listen to?

Yeah, I mean, I. It's like I shouldn't be saying this on a podcast, but I. I'm not a huge podcast listener, to be honest. I'm not.

I'm not, dude. I'm not.

Okay. Okay, good.

And here I am with the podcast. The irony.

Yeah, I mean, like, I've kind of devoted my entire life and career to, you know, this stuff, so I think about this all the time. So a lot of the stuff I read is like non business books. I read a ton, just not the typical business book stuff. I don't listen to a ton of podcasts, so I don't know that I'll have a great recommendation there. You know, a lot of the reading that I've done in this category is on, you know, how to become a great CEO. The Outsiders is a great book kind of on that. And the different paths there, that's by Thorndike. So, you know, there's good stuff out there. But, you know, I, I think it's important not to be fully consumed by this and introduce things that are not just business books and business podcasts all the time, because it, it gets a little echo chambery if you do that.

Yeah, I would agree with that, Andrew. This has been a lot of fun, man. If people want to just, you know, reach out, learn more about Stamped or yourself or Tiny Capital, where. Where should they go?

Yeah, stamped is stamped. IO tiniest tiny.com on Twitter @Andrew Dumont. LinkedIn. The same. Facebook. The same. So yeah, I'm out there.

Right on. Well, Andrew, always a pleasure doing a podcast with another Andrew, so definitely.

Likewise. Likewise. Thanks for the time, man. I appreciate it.

All right, cheers, man.