SaaS Acquisition Stories w/ Marc Abousleiman - Co-Founder & CEO at Appregator

Foreign.

I'm here with Mark from Affirmator and he recently acquired, or I should say Micro acquired, a Shopify app for seven figures. So Mark, thanks for joining me on this podcast.

Appreciate it, Andrew, thanks for having me. And I want to give a quick shout out to my co founder, Michelle, who is not able to join us but is with me every step of the way.

Her name is Michelle.

Michelle.

Oh, Michelle. I missed her. My wife's name is Michelle, so it's like, oh, a combo.

A lot of people call him Michelle and he's not too thrilled about it. So feel free to do that if you want to get under his skin a bit.

I will next time I talk to him. Well, hey, Abrogator, I'd love to know a little bit more about how do you guys get started, background of the firm, just really what you're looking to accomplish with Abrogator.

Yeah, happy to. So Apprecator acquires, scales and builds Shopify apps. That's what we're focused on. That's kind of what we do every day. Michelle and I started the firm earlier this year, officially launched in June, so it's still quite recent. Micro acquired our first Shopify app, so we're pretty pumped about that. Thank you for making it such an easy process. But our goal really is to become a one stop shop for merchants and kind of fulfill any need they need in e commerce enablement. And so whatever that might be. If you're just a small store and you're getting started and you want to pick a theme, you know, we'd love to be able to do that. If you're a much larger store and you're doing really complex things that, you know, trying to get your conversion rate up 10 basis points, that's something we can help with as well. So our vision is to become kind of an integrated set of software solutions that'll let you as a merchant, run your e commerce store on Shopify as efficiently as possible.

Nice.

I love it. If you could acquire one Shopify app, what would it be? What's your favorite?

Just one?

Yeah, like the biggest one at a reasonable price or maybe you can.

Yeah, I think I'm going to have to go with the one we just did. You know, it's nothing like shouting out our own portfolio, but we just bought an app in the SMS marketing space called Supercharged sms. And the reason we did it is because, you know, in the new reality of DTC today, it's really difficult to get the same return on ad spend that you Used to get. And it's really imperative to have a channel to communicate with your customers one on one to be able to, like, personalize commerce. That's why we wanted to go for that. It's such a powerful building block for anything we want to do in the future. Being able to chat directly with your customers. And let's face it, most people want to text these days. They don't want to email. They don't even open their emails anymore. And so that's kind of what drew us to that acquisition. And listen, it won't be the only one, but we're really thrilled to get started with it because such a powerful tool you can use going forward.

Nice.

So that sounds like a fantastic acquisition. So congrats on closing that. Can you walk me through what? Yeah, there's a lot of deals on Microcquare. As you know, there's lots of different Shopify apps that you could acquire. Can you walk me through? You know, aside from just the product, how did this one really come to close? You know, you spoke with a buyer. You know what. What made you confident that this was a good, sound acquisition comparative to maybe the other options on Microacquire?

Yeah, I mean, listen, you guys do a great job putting up opportunities that are compelling across a bunch of different industries and size ranges. Like, we're always poking around Microacquire, even looking at stuff that we wouldn't buy just because it's interesting. And so it's a really good first filter to figure out what's going to be within our investment thesis and within our size range. I think what really jumped out to us is the capability set that we'd be acquiring here and the financial metrics. There's nothing to prove how good your company is than showing a bunch of growth and healthy margins. And so for folks out there who might be thinking of selling their app, having really good metrics and financials in place just makes life easier for people who want to take it over for buyers to examine it. Because the more you have to dig and figure out, you know, what's really going on, the longer that process can take. And so Micro Acquire, you guys do a great job laying out all the metrics, all the financials. At a quick glance, you can see what's interesting and what's not interesting and kind of make everyone's life easier. Deciding to either move forward or pass.

Nice.

I guess, and I really love that answer. I guess another thing I'm curious about is was there anything in particular that the seller did that Just gave you confidence. Given the size of this acquisition, you know, you really want to cross your T's, dot your I's on this one. Was there anything that the seller did that gave you additional confidence? Maybe things that you would like to see every seller that you interact with do the same?

Yeah, I'd say, like, once you put together a really good package and you first get someone's attention, that's kind of the first step. And you want to give yourself the best possible chance of like, a good selling, solid conversation with potential buyers. Then it kind of becomes like, how do you perform? And you get a little bit off micro require. But, like, how do you perform on the initial call? So we'll hop on the phone with opportunities that we think are interesting and chat with the founders and ask basic questions like, why'd you get started? What are the issues facing the business every day? And through those conversations, you can see two things. Number one, like, how well the founder understands their own business and is able to clearly communicate that. And number two, does it match up with this stuff that was on micro Acquire in the first place? And usually it does. Right. But. But it's pretty common to have, like, oh, it's like a slight detail that was different in your listing. And so it's really important to just like, be completely transparent and as upfront as possible because a buyer will probably figure it out. And it's. It's better to just be upfront about stuff than to have them figure it out later. And that, that, that's something that the seller did particularly well, was just, hey, this is what it is, this is what it isn't. Right. We wish it was all these things. It's not there yet. And so you kind of know what you're stepping into and can assess that risk.

Nice.

What is your. What does your due diligence process look like? I can ask just from like a high level. You don't have to go into, like, super detail. Yeah.

It'S pretty straightforward. Because of the fact that we're only focused on the Shopify space, the things that you want to look for become pretty standardized. Right. Like we'll get access to someone's Shopify partner dashboard, and they do a great job just kind of streamlining the data so we can get in there and poke around revenue customers. We can understand, you know, the positive reviews you've been getting and why, and that's kind of on the, on the growth revenue side of things. And then we'll take a look at the expenses as well. Right. So we'll do a full financial due diligence, understand, like, what the monthly financials have been. That's one pillar of our work streams. We'll go across, you know, similar things across tech operations, legal, like really a full review of what the business is alongside some of our advisors, and that's. It feels like pretty overwhelming for someone who hasn't done it the first time, but it's super important to be able to get a full and accurate picture of what you're potentially buying.

Nice.

And I asked this question, and I think you've touched on a lot of good points, but I asked this to pretty much every person I talked to on this podcast. But if you had to give maybe two or three pieces of advice for founders looking to sell, what would it, what would it be and why?

Yeah, I think in this space in particular, first piece of advice would be document your code and document everything you're doing, because it might make sense in your head and you might feel like you're slowing down by just writing down all the steps that you need to do to run your business. But the reality is, if you're looking for an exit or if you're even considering an exit in the future, you're not sure. Having everything clearly laid out and, and kind of making yourself no longer mission critical for your business is a very, very powerful thing because it means that someone else can take it over. It doesn't mean that there's no work going forward. It just means that that handoff is smooth and people will reward you for that. Like, having something that's quote unquote, plug and play is super valuable. And so that would be like my number one piece of advice. And the number two piece of advice would be like, no matter how small your business is, try and run it professionally. Right? Like, try and have clean financials. Try and have well documented code, like I mentioned, because the clearer it is for external parties, I find the cure becomes in your own mind, and then you can make better decisions as you go.

Nice.

So I assume you talk to a lot of different sellers, and with that, you know, sometimes you have a great experience and sometimes you have a bad experience. What are some of the pet peeves or maybe yellow flags that you see common with founders?

Yeah, maybe one of the biggest red flags, Andrew, is I understand that some people might have pressing needs for cash or maybe they're working on a super exciting new project, but whenever someone says, I want to offload this really quickly, this needs to be done asap raises suspicions for me. Just because it's like, you know, how quickly is quickly, like, why do you want to get it done so quickly? You've spent months, if not years building this. Like, what's going on? And so making sure you don't put yourself in time pressure where you have the time to answer questions and, you know, you might have to go through multiple buyers. Like, that's super important because it kind of allays people's concerns.

Yeah, they can kind of signal. Yeah. Trying to. Trying to get this off quick because there's something bad about to happen or something like that. So I. I agree with you there. So, yeah, just honesty and transparency, I think, goes a long way, because that's. That's always my first question, you know, is, why are you looking to sell? You know, and I think that answer can kind of raise more questions, and it addresses the question. So.

And those answers are always varied. Like, we're super open. People who have built a successful business should have the opportunity to be rewarded for that. And that's why we try and be as flexible as possible. Some people just want to sell and then move on to another project entirely. Other people feel like they need help and they just want to join a bigger team and have more resources behind them to turbocharge their growth. And whatever category you find yourself in, just know that there are buyers out there that will be amenable to both. But the more honest and transparent you are, the more someone can really put yourself in their. Put themselves in your shoes and understand that, like, hey, if I were sitting where you are, I'd probably want to sell to. The better it is because there is information asymmetry. Like, you don't know what you don't know. And if someone's really, like, looking to sell, like, is something bad coming down the pipe? I don't know. I don't know. But that's a really great point you made.

Yeah, I appreciate that. In terms of the Shopify ecosystem as a whole, there's so much potential with E Commerce going forward. Is there any other categories that get you super excited specifically?

Yeah, I think right now we kind of separate the world from two points here. It's like, what's nice to have and what's neat to have. So you might have some apps that make your website look super cool and they give a really sleek feel. But if there's a tough economic environment and people are starting to look for ways they can save money, is your solution mission critical? Are you saving merchants time and money? And when you think of things like Fulfillment solutions or anything that'll increase conversion rates. Maybe it's like a bundling app or something like that. Those tend to have pretty clear measurable ROIs. And so I'd be hard pressed to find a merchant who's like, oh, times are tough. Let me delete all my bundling capabilities on my website because you're going to hurt yourselves. And so we kind of like right now, anything that'll save a merchant time and money. And there's a lot of new and exciting things, especially with the updates that Shopify pushed to its checkout. Functionalities that, you know, are right in the, in the middle of our focus right now. But it's not to say the other apps don't have a place. It's just that, you know, what is that churn going to look like if the world gets a little bit tougher and what does success look like for that app?

Nice.

So would you agree with this, like basic vitamins or. Excuse me, pain pills over vitamins?

Yeah, pain pills over vitamins. The vitamins certainly have a place. Right. But it's just a question of price. I would say, like, it's not that they're not interesting. Just a question. Can you describe the same value to something that is a nice to have? Right. Is a vitamin nice?

So with Shopify so much tremendous growth over the past, let's just call it pandemic tailwinds or what will you. And that's kind of, you know, tapering down a little bit. But I think everyone's in agreement. You know, E commerce is, has so, so much potential. Where do you see apprecator and just kind of like the Shopify ecosystem as a whole two or five years from now?

Yeah, I think, look, Shopify has done a tremendous job not only in the last couple years since COVID but even before that, empowering merchants to just tell their own story and have their own website and have full flexibility. I think a large part of why they've been so successful is the attitude they've taken towards their developer partners and like the partner ecosystem as a whole. Other players could probably see it as a little bit competitive or confrontational. Like Shopify is out here empowering the partners like this. The partner EcoSystem makes like three or four times more revenue than Shopify itself and they've used that as a phenomenal moat. Like, I think people want to build on Shopify because they know they can build a real business and they can get a huge merchant base there. And that's not something that is measured in months. That's measured in years. Like you pointed out, E commerce in the US but also globally is still massively under penetrated. More people are going to shop online on their phones kind of everywhere and Shopify has done a great job positioning itself at the forefront of that. So for me, can I predict the future on a six month basis? I wish I could. I'd make a lot of money. But I think that this has like 10 plus year tailwinds. I think that in the handful of years, if you can pick the right apps that are going in the right direction, Apprecator will be in a phenomenal position to be part of that change. And yeah, that's kind of where I see it going. I don't know about you.

Nice.

I'd say I'm in agreement in terms of just everything moving online. I think it's a natural sort of progression of just technology taking say even Main street businesses where they're starting to open up E commerce stores just makes sense and you get a global audience of customers rather than just like your geographical customers. So yeah, it'll be exciting to see the next 2 to 5, 10 years of E commerce and how all that plays out. I think I'm also biased too. I'm big in SaaS and everything, so I'm bullish on kind of everything. So take that with a grain of salt. But I'm going to throw a curveball at you. What do you like to do for fun, Mark?

I'm a big water sports fan so like I do a lot of kite surfing, paddleboarding, stuff like that. For fun.

Nice.

I have never been kite surfing but I've always wanted to. I grew up surfing. But kite surfing, getting it up, like getting it up initially. Do you do by yourself or do you have like a buddy that kind of lifts the tight up and then it goes.

Yeah, no, it's, it's really dangerous to do it by yourself. You should do it with a friend. Like most accidents that happen are people like slamming themselves on the beach or stuff like that. Like you want to be safe there. But once you get going it's phenomenal. Like you feel like you're flying. It's really an incredible sport. I actually do it with my whole family. So like my parents, my brother, everyone's an addict and we kind of do it as a, as a family, which is a nice thing.

Nice. Where are you based again? I'm sensing a pool of water next to you.

No, I, I'm based in, in Boston right now, but my family's originally From Lebanon, close enough to the water. Ish. Like, there's some pretty decent kitesurfing, both those spots, but, you know, kind of get wherever I can.

Nice.

I had a friend in high school who had always asked me to come help him kite surface, and I never did. I was like, no, I probably should have after hearing you tell me it's a little dangerous solo, but. All right. Moving back on to acquisition questions. If you could only look at one metric. When you're looking at these Shopify apps, what's the one metric that stands out the most to you or is most important? Like, if literally that's all you could look at, what would it be?

I'd look at Customer ltv. Like, it's kind of a. That's kind of a cheat answer because it captures multiple metrics.

Yeah, that's a good answer.

Who are your customers? How long are they sticking around for? And, like, why are they using you? I mean, the interesting thing about the Shopify app store, like, people vote with their feet, so you can think you have a good solution, but until you have the user base and the growth to prove it, someone else is grabbing that market share. And so it's really democratic in a sense where anyone can spin up. It's not very difficult if you want to do it and you dedicate the time to do it. There are a ton of resources to becoming an indie developer, and time will tell. You put your app on the app store, you do some marketing. Like, you should be able to get traction pretty quickly if you have product market fit and you're solving a real problem. And if you're not, you know, you can keep iterating and trying to get that. And so for me, like, customer centric metrics are the most important ones and everything else, like margin, etcetera, like, will fall out from that. Right. Are you solving a real problem for your customers?

Nice.

And then in terms of aggregator, do you guys have like a goal in terms of acquisitions over the next, like 12 or 24 months or anything like that?

Yeah, I mean, we're flexible. Like, we. It depends kind of what's available. I think our goal is more like product focused than acquisition focused. So we have a very clear roadmap of the capability set we want to have going forward. And often we will apply that lens against the acquisitions that are coming through. So there could be a company that's super interesting, that has great growth rates, but it doesn't really fit in our product roadmap, and we won't really go after it. I think our target is probably to be doing like an acquisition every month or every other month. Now some of them have multiple apps in them and so it gets a little bit more complex to do it on a per app basis, but that's kind of how we're thinking about it.

Nice.

I love it. I guess final questions would be. I always like to ask this. Who's. Who's one entrepreneur that you look up to?

That's a tough one. Listen, I think people who do things, you know, very differently tend to fall in the entrepreneurial bucket because they're not conforming and they like, want to do things their own way. And so I don't really have an answer to tell you frankly. Like, I'm not really reading entrepreneurship books and like looking up to people specifically. It's more like people in my own personal network that have done that. And then like friends that I really look up to where I see them do something completely differently. And whether it's inside a real company or they're founding their own company, I think you can be like an intrapreneur, as they say. And so it's more like personal based than it is like looking up to public figures, if you will, for me at least.

No, I understand.

Sorry for the non answer.

No, that's a great answer. I mean, you know, that's. I think that's what fuels a lot of entrepreneurs is just, you know, close relationships with, you know, other entrepreneurs. Because you're not talking to Elon Musk on a date basis or anything like that. Or Toby at Shopify.

You know, he's not returning my calls, sadly.

Yeah, yeah, he's not responding to my emails either. And then next question would just be, you know, with all this success and again, I'm super excited to see how far you go with advergator. You know, what's maybe like one tip or like if you can go back in time and just show yourself one thing, what would it be?

If I could go back in time and give myself one tip, it would have probably been stick with computer science after college. And like, I really enjoy, I worked in private equities. Like, I really enjoyed that. But man, it took a while to dust off my coding skills and to go back five years and like, think about that. So that would be my one tip for myself.

Well, it's never too late. You can always go back to school, man.

Exactly.

All right, Mario, it's been an absolute pleasure just hearing your story and congrats again on the acquisition. I'm rooting for you and your team. And if people want to get ahold of you, maybe they have a Shopify app and they want to see if Abrogator is a fit for you. What's, what's the best place to contact you?

Yeah, you can go. Thank you, Andrew, first of all for having me on. Really appreciate it and really appreciate everything you guys do for the ecosystem. I think you guys are really doing an amazing job.

Thanks.

You guys want. Yeah, of course. You guys want to get in touch? The easiest way is just to go on our website, Abregator IO. There is a contact form. We have our email link there and you just ping us a note and we'll get right back to you.

Cool. I'll put that in in the show notes. But Mark, thanks again for coming on. Rooting for you all the way, man. And don't get hurt kites.