SaaS Acquisition Stories w/ Sukh Sidhu, Founder and CEO of Stridist

Foreign.

I'm here with Zuck who recently Micro acquired a startup on Micro Acquire and with that being said, suck. How you doing?

I'm good, Andrew, thank you for having me. It's a pleasure to be here.

Yeah, likewise. So for those who aren't familiar with you, your background, do you want to just give a quick intro of yourself and I want to hear the Dubai part too.

Yeah, sure. So I've spent most of my career in the fitness industry. A couple of years prior, just out of college, I actually spent some time selling women's shoes online, which was interesting. So a brief stint in E Comm before E Comm was a big deal, probably should have stuck with it and then into the fitness industry. I loved fitness, loved training myself and a very typical path into the industry was, oh, I like training, maybe I should become a personal trainer. Right.

How much getting a bench press nowadays? I'm just kidding, sorry, very little.

So I became a personal trainer, went really well because I've always, you know, I've enjoyed the business side of it, whereas most personal trainers like the exercise side. I enjoyed the business and the marketing. So I did well as a personal trainer. I ended up opening a couple of gyms in the UK and then very earlier on 2013 I started working with clients online again before it was really a thing. And it's still very early as well. So I started working with clients online around 2013. That really took off. I had clients all over the world, sold my gyms in 2016 for next to nothing more. So just to get rid and so I could go all in online. And then around the same time as that, I started selling online courses, business programs, doing some mentoring, basically teaching other trainers and coaches, nutrition professionals, how to move online, which is the big shift we're kind of seeing now in the fitness industry. So obviously when I came across Strydus on Microacquire, which is a platform for the same audience, there's kind of a no brainer and that's, that's kind of how we ended up here today. The move to Dubai was around two years ago from the uk. So yeah, that's where we're at.

That is awesome. I love, I love that story of how you acquired something that is so in your zone of competence and zone of geniuses as well as assume, because I assume you enjoy fitness and helping people in terms of getting in shape. So that's awesome. But I do before, before I start diving into questions on that acquisition, before we started recording, I wanted to know, are the, are There really abandoned, like Ferraris in Dubai, like from people who just are so rich they can't get them out, so they just leave them.

No, so that's not what happened. But it did used to be a thing, so it was more so around like the crash in 08. So over here there's kind of no fail safe, right? The government aren't going to bail individuals out, they'll bail businesses out. So. And back then as well, it was basically illegal to miss payments, right? So what happened was there was loads of expats, loads of guys from the us, the uk, all around the world who had these Ferraris on finance. A crash happened, the bottom fell out, they couldn't afford repayment, so they just drive them into the desert, get on a plane and leave, basically. And so that's what. That's how that started happening. But, ah, they could probably fill a desert again at the minute because the cars out here, as I was saying before we went live, it's obscene. I did a video for one of my friends this morning because I do my work in a golf club. Yeah, I work out the golf club, have a coffee in the morning and I walked outside and there's a Lamborghini Urus, a Rolls Royce Wraith, the Rolls Royce Cullinan, a Mercedes G Wagon, and there were only about eight cars in the car park and that was like four or five of them.

Lamborghini Urus. If I could get one suv, it'd be that one. Little. A little. A little out of my price range, though. All right, now that's. Thanks for. Thanks for. I've just seen the picture of all the Ferraris. I was like, whoa. So thanks for clarifying that. All right, let's get back to the good stuff. So you go on to Microacquire. You come across this company that seems like a great fit. How did you initially reach out to the buyer and what was that experience like going through the acquisition process?

Yeah, honestly, not to blow smoke up, you know what, Microacquire just makes it so easy, right. So the plan for me last year just to roll back a little bit was to start acquiring small companies. Um, so I actually acquired another company on Microacquire just before Strydus. Just a small acquisition. And the plan was I was going to do a few, and then I came across Strydus. Light bulb moment, you know, huge domain, expertise for me, area of expertise. So I reached out to Mike, the guy who was selling it, and he was basically a client of a coach who used a different Platform. And in, in the fitness industry, there are. There's lots of competition for what we're building, but they've been around for, you know, 10, 20 years and none of them are liked. They're all just tolerated. So that's kind of what he discovered as a client. We spoke to Mike back and forth and, you know, we used your documents, your templates. The first offer we actually put in, I think offended him slightly. And maybe I was a bit naive and I did, I didn't purposely lowball it, where I was probably too logical in my approach to valuing it based on his MRR and the fact that it wasn't growing.

Where was, where was the monthly recurring revenue when you first got it?

I think when we first found it on Microacquire, it was around just over a thousand dollars MRR and just flatline. No marketing, no presence online. And I think, you know, maybe we offered 2.5 to 3x arrangements. In fact, it was probably quite a good offer initially.

Yeah, no, not bad.

Yeah. So, but the reality is, because I knew, like, I could at least have a successful launch that would pay back a reasonable amount, I probably would have been willing to pay quite a lot more. So anyway, we increased the offer. There was quite a bit of back and forth just through diligence, as there often is, but I think from getting that second offer right to close was probably two and a half months max. Two months? Yeah. So not too long. I think probably quite standard. I know people nowadays are getting them done a lot quicker, I think. I listened to your podcast with Joe Spicer. Is it who moves quick? So not that quick, but yeah, it didn't feel too long to us.

Yeah, we see acquisitions close sometimes. Sometimes it can take a year. We've seen some big deals. They'll just stay on Microacquire, usually with a higher price, and then eventually they just wait for a strategic buyer where they have maybe an audience where basically the business is worth more to the buyer than the seller. So they're willing to pay above, you know, typical market valuations that you see, which I find fascinating. And then we see like 30 days and 90 days and then people like Joe, like a week. But what, what was, what was the first company you, you micro wired? I. I wasn't aware. I thought it was just this one.

So it was a company called Sunrise KPI and it, like I said, small acquisition. I think it was like 10 grand US and it's, it was actually a great opportunity, but I, I barely touched it because I think it was two weeks later. I found Stratus very shortly after and it just, it was very apparent that Stratus needed, I wanted to give it all my attention. But yeah, summarize. KPI is like a metrics dashboard for like solopreneurs. So for example, your, you could measure your social media growth, your email list growth, amount of leads, conversions, new clients, revenue growth, all in one kind of aesthetic dashboard.

I remember, I've seen that. I remember when that one came in. I liked it.

Yeah, it's cool. And what we did is we started work on it and rebranded it, pretty much ready to relaunch. And then I found Stratus and I just, honestly I haven't touched it since.

Well, you can always put it back on Microquire.

Yeah, I might do that.

Yeah. So tell me about Stratus. Where is, if you don't mind disclosing, where is, where's monthly recurring revenue now?

It's about 36. 36 K. Mrr. Yeah. So.

So you 30. That's 3600% growth. Am I getting that right?

I have no idea. I have no idea. Yeah, no, that's isn't my strong suit.

3,000. Okay. So. Okay, let me process that. God damn. Well, first, congrats. Second, now I'm just wondering what, what did you do? Like what, what were, what were some of the unlocks the levers that you pulled. So, and you don't have to, you don't have to give away your secret sauce or anything like that. Just a high level is completely.

Yeah, I mean there is none, you know, we spent bearing in mind. I had the audience. Right. So I spent a couple of months just rebuilding and adding features that I knew I would have to have in order to launch to an audience who are already kind of mature and have seen the competitors. So I spent a month.

So you had an audience in place already? Yeah, I love that strategy where you have people willing to buy as soon as you acquire the company. That's all. I'm sorry, continue.

Yeah, it was just, that's why it was a no brainer from a purchase perspective. So we spent probably too long in development before I relaunched it to my own audience. But then in April, by this point, MRR had gone down to like $700 I think. So then in April we relaunched, I think somewhere between the first 15 to 20K. MRR came in the first eight weeks, six to eight weeks. And that's probably credited to my existing audience. And then since then it's largely been word of mouth content really. On social. But yeah, the bulk of that MRR was from just building up anticipation, FOMO urgency, all that kind of classic copywriting and marketing principles, building up a wait list. And then on the day we launched, funny story, not funny at the time, but she actually hit the fan. The data that we found out after launch that the database wasn't big enough, we crashed for about 12 hours until we figured out that was the issue. So on launch day, we actually got like 350, 400 trial users and then we were offline for about 12 hours, which kind of killed the momentum a little bit. But yeah, that's that. That initial launch kind of set the tone for the last couple of months.

I love that. I love when servers crash because you can do that in one of two ways. I mean, would you like your server to always be up because no one's using it or crash because, you know, people are, you know, obviously really interested in the product. So it's. I put it in kind of the first world problem bucket, like, oh, you have too many users. That's so awful. And then obviously there's a clear fix to, you know, server downtime and stuff like that. So that's incredible. So, man, you took this thing. So you acquired it at 1,000 monthly recurring revenue. So it's around 12,000 annual recurring revenue. And now it's at 36. I can't do the math on that.

But I think it's like 4:30, something like that.

4:30,000 annual revenue. Damn. Are you doing any paid marketing or anything like that?

Not yet. So more fun. About two weeks ago, we just, we kind of decided we ran out of steam, like pushing it to my audience and me pushing it and the kind of word of mouth. So the plan was let's start running paid cold outreach, stuff like that. And then we crashed again.

Very nice.

Yeah, so we crashed again and kind of just put off direct kind of response style marketings. But as of yesterday, we turned paid on cold email and also just me kind of having conversations and hustling a little bit because we take card details at free trial. So it's almost worth my time when I have an hour to jump in Instagram DMs and speak to people. So a bit of everything.

Nice. Are you working on Stratus full time now?

Yeah, pretty much. I still have a handful of like higher paid mentoring clients because I haven't taken any money from Stratus and that kind of pays my bills and ensures that I'm not dipping into savings. But my. I'd say I still spend over 40, 50 hours a week on Strydust and then probably 10 hours a week on consulting, SL mentoring.

Nice. This is incredible, man. Congrats. We're. We're. So you're already at, let's call it half a million in, in your current revenue. That's phenomenal growth. I love these stories because, you know, there, there's builders where they're. People are really good at building projects, but, you know, they can't take it farther. And a lot of the times it's. They don't want to. They want to go and build. So you acquired something and it sounds like you're more of a scaler where you're able to, you know, grow the company bit further than the original owner. So it's win. Win.

Yeah.

So. Yeah, go ahead.

So the. So Mike, who he acquired it from was very much that he built the product and then realized I can't market and that was it. And so he got, you know, an effective outcome. And then for me, I'm non technical. The thought of building this from scratch and trying to figure out, you know, developers from scratch and what technology from scratch is just probably a non starter, to be honest. I know you're non technical, having listened to some of your stuff before, but I'm probably another level of non technical, like my iPhone is a struggle sometimes. So the thought of trying to develop something from scratch is probably a non starter. So it's a win for me as well. And you know, I know I can market to this audience and, and can help them as well and know what they need. So yeah, it was a definitely a win for us.

Yeah. And then you definitely skip. You saved a ton of time too, because you're buying, you know, product market fit where there's some even just at 1,000 in monthly recurring revenue or 12,000 if you look at it annually. That's some good traction where there's, there's a lot to work with in terms of talking to customers for feedback, seeing what's working, what's not working, and just getting to that point alone can take a year. So you kind of spend. Skipped over that that year where you're just eating glass, begging customers to just look at the product. So that's. That's awesome. So now I'm just wondering where, like how, how far do you plan to take this? What's. If you just had to say two years from now, where, where would you love Stratus to be?

I think we've probably. I see two options for our future. So I'm super confident in, you know, us getting to a few million revenue a year. Super confident. I don't think it'll be easy. I think there'll be periods of just stuck. But I think we can do that and I think that's an outcome we can get to in the next couple of years, two, three years. From there, I'll have a decision to make because, you know, I can see us getting to 5,000, 10,000 users. Beyond that, I think it's a world of pain in the industry that we're in. It's so fragmented and just a very difficult industry in general to scale in and bring together. So a couple of years, a few million revenue, and then it's out of the decision to, to maybe sell or, you know, take that swing for the fences maybe with the same company.

Yeah, you maybe bolt on like some other, you know, fitness related, related products or maybe even like a community on there as well. So other tidbits. Um, I guess, you know, I, I'd love to know, you know, a lot of people that listen to this podcast are both, you know, buyers and sellers. If you had to give just like any advice to. So you've acquired two companies on Microacquire, so I assume you've talked to a lot of different founders looking to sell their businesses. What are some things that founders can really do to make you comfortable making an offer and moving forward with an acquisition?

So something that sellers can do.

Yeah, sellers. So I'm a startup founder. I'm looking to sell my business. What would you, what like three tips would you give me in order to increase my chances of you being comfortable acquiring my company?

Yeah, so the first thing is like a call and just having a conversation with the founder is, is great. Some. And some founders are understandably standoffish. I'm sure sometimes they feel like someone may be wasting their time. But just having a conversation, being able to have a conversation with a founder is just a massive help. And having that early, if they're willing to do that often I will ask, you know, what are the challenges and what are the problems? And you can tell straight away if somebody's just sugarcoating the true challenges that the business may face or the software may face. And if, when we have. So when we had a conversation with Mike, he had a developer on the call and you know what, some developers are like, they just, it just comes out and they had kind of have no filter. And he was just incredibly honest with what he changed, how he'd improved the platform. And that really put our minds at ease because he was kind of giving us the roadmap to make sure this thing worked and could scale. So that really helped us. And then I suppose just being super responsive once we get to the point of due diligence, you know, quick responses, quick questions, quick answers, it's just all incredibly helpful for a buyer.

I like that. Yeah, I mean that's the classical term of, you know, time kills deals. I recently saw a deal on microaguire. A founder got a really fantastic offer a little bit below their asking price and they went back to all the other buyers saying like, hey, if you could beat this. And then he waited, I believe, two weeks to respond to the offer from this other buyer. Now their buyer had moved on. So as a seller, I think it's really important to understand that buyers are looking at multiple different companies in a lot of cases and scenarios. And so the faster you're able to respond, the higher chances you have of actually closing a deal. So I really like that in terms of like, like what are maybe some red flags that, you know, you kind of reversing the question. I'm sure the answers will be similar. But what are like some big, you know, just do, just do not do this if you're looking to sell your company.

Yeah. So we have. I got in a couple of situations on Micro Acquire and I think one off where I didn't end up buying. And this is again pre strides where I submitted a letter of intent. We'd moved into due diligence and the seller just was still really unwilling to share much at all. And I understand kind of the protectiveness still, but there comes a point where you're going to have to share like code or at least some code or at least some insights to the platform. And on both of those occasions it was a case of they wouldn't really show much of the code. It was like, here's a snippet of the code or here's a quick screen share live on a call, but you can't record it. So I think at a point a seller eventually has to give you the keys to have a look around and either trust the process or just ensure that contractor airtight or, or whatever else in order. But there has to be a level of trust there as well.

Yeah. And due diligence is one of those things to get into where even both the buyer and the seller are uncomfortable. You know, like, you know, obviously I have to share sensitive things about my business, but it's required because without that information, you don't really know what you're buying. So. Shameless Plug. If you're a seller and you're in these situations, reach out to somebody support at Microacquire. And we'd be happy to help or assist because sometimes some due diligence questions can be, you know, tricky. Like, hey, send me your entire customer list. The answer to that is no. Scrub it. Send anonymized data. Stuff like that. Our team is, is happy to help with if you feel that you're not sure how to handle a certain situation. But that is great advice and it's true. Yeah. If you're not forthcoming and you're not. And again, that kind of goes back to, I think, what we were talking about earlier, where time kills deals. Like, if you, if you're difficult to work with, you know there's going to be a transition period as well. You may need this person three months down the line. To me, those are all little yellow flags where I start to think, okay, so we're at step one and we're already having issues. And then step two, I'm, I'm just asking like regular due diligence questions. I'm not getting them. Now I start thinking, okay, how, how's closing going to be? How's the actual transfer going to be? Are you going to be around for. How, how much can I rely on you? You know, that, that relationship and that trust and that. Yeah, like the, the trust in the relationship and your ability to properly communicate. I think it's just so crucial to, to getting a deal done.

Yeah. And like you said, alluded to that is it's a yellow flag that this is going to be hard at every stage because, you know, we didn't ask anything of Brian from Sunrise, KPI or Mike from Stratus other than, you know, we may ask questions for the first 30 days and then we've asked questions after that and they've been fine. They've been easy to deal with. They jumped on calls during those first 30 days if we needed to. And you could tell that was always going to be the case because it was like that during due diligence. Whereas if it's the opposite and you know, due diligence is a nightmare. You just know after the, after the close, it's going to be a nightmare to get them on calls, get help, get answered to questions. So, yeah, it's, it's two deals that we walked away from because of that.

Yeah, that. And I don't blame you either too. Just because again, you Kind of get a feeling of like, you know, it's, you know, how, how, how close are they holding their cards? Like, you know, in terms of, obviously, you know, there's a proper way of delivering this information and a way of finding a middle ground. Um, but again, if it's just like, hey, I'm, I'm not willing to share this, this, or this or this, it's just so hard to get over the finish line. Especially if they're just regular due diligence questions that go through. And again, seamless micro pla. But we have resources on Microquire in terms of what to expect during due diligence. So if anyone listening doesn't know what due diligence is, basically like being audited by the irs, but times a hundred, depending on the size of your company. And there's standard questions and we definitely have resources that can help with that. If anyone's just wondering what is due diligence? Because a lot of founders just don't know. They don't. It's, you know, almost every founder, every acquisition is their first acquisition. So, you know, there is some reasoning that I understand behind like being really sensitive and, you know, maybe withholding information for whatever reason it may be, but it's just part of how you get your company inquired. So I guess, you know, my, my, my last questions would be, you know, how did, how did you get into this in terms of, you know, acquisition? So, you know, you, you, you had gyms before. Like, what made you decide that, you know, entrepreneurship, the. Through acquisitions was, you know, a pathway for you. And how did you learn, you know, what, you know, today?

Honestly, I think it was just probably reading bits on maybe Twitter. Andrew Wilkinson, I think it is, and a few other guys who kind of, I don't want to call them PE companies, but they're almost holding companies of numerous small or largest aspect. And I remember just, you know, reading about Constellation and other companies like that and thinking that'd be pretty cool to just own, like, I know. So my strength is marketing and sales. So microacquire came along and that's probably when it started, when kind of you started coming along with microacquire the opportunity to maybe acquire some technology companies, and not necessarily technology could be agencies that were struggling to get clients but had everything in place. I just thought I could come in. I've got team members who work with me in my course business who could come in. We could market it, install operators pretty easily. I've installed managers before and then step back, just. It felt like, where I was heading at the time before. Obviously, I came across Stratus.

Right on. All right, final questions. These ones are going to be kind of random. I always just do fun questions at the end. If you could travel to any place in the world right now, where would it be?

Rome, probably. Favorite place in the world.

Rome. I've been Rome. Good, good. Gladiator is my favorite movie. So when we got to the.

I just love that you can walk around the corner and see something that's a thousand years old and then walk around the corner and see another thing that's a thousand years old. It blows my mind.

It blew my mind when I was there. Did you go to the. The fountain? Big fountain.

Fountain.

Beautiful thing I've ever seen in my life.

Yeah.

We went to the Vatican, but we couldn't get in because we were wearing, like, tank tops, me and my wife. You have to be, like, clothed up or something like that.

Yeah, yeah, yeah.

So they were like, no, you're not allowed to go back. Yeah. If. If. If you had to recommend. Let's say you're stuck on an island and you could only bring two things in a book, what would they be? We're going really random. Sorry. I'm in that mood today.

Do you want me to name the book?

Name one book and then two items to help you survive. And you can't bring Wilson the ball from the movie.

So the book. I'm gonna be really boring. I'm trying to think of. All my books are very tactical business books, and I don't think that's gonna be helpful on a desert island. But I'll just name a good book I've read Reasonably Recently, Built to Sell, which I just really like by John Warrilow.

Yeah.

And it's a story as well, so maybe that'll help me pass the time. Two things. I feel like I need something to make food, so I'm gonna say a barbecue and a radio. Can I have a radio?

You can have whatever you want. Yep. You get a full sound system over that. And then final question. Just if people want to get a hold of you and learn more about your story. And strike.

Twitter is probably the best place I inconsistently build in public. So succeedu.uk on Twitter is probably the best. Best place to inconsistently follow along.

All right. Thanks so much for joining this podcast, man. I. I'm. I'm rooting for you. It's incredible just to see the growth that you've achieved in such a short period of time. So keep up the inconsistent build in public because it's obviously working.

I appreciate it. Thanks for having me.

All right, man. Cheers.