SaaS Acquisitions Stories w/ Kevin McArdle, CEO of Sureswift Capital

Foreign.

I am super excited for this one. I'm here with the man, the myth, the legend, Kevin McGardle, the founder of Sureswift Capital. I don't really think he needs an introduction, but by far one of my favorite private equity firms in the space, or holding company, whatever. How would you describe Searchlift, Kevin?

Yeah, so we prefer the term holding company. And I like to steal from one of my friends. Brent Beshore put in his annual letter something that resonates with us too. He says calling us a private equity firm is like calling an ostrich a bird. While factually correct, it doesn't really fit the spirit of the word. So technically we're a private equity firm, but most of what people know about pe, which is buy load with debt, strip out expenses and then flip to the next highest buyer, we don't do any of that. We don't plan to liquidate our funds. So I just prefer a software holding company.

Nice. So how many companies have you acquired up to this point?

46 over the last seven years as of recording.

How are you holding up? That's insane.

So I've got a great team. Like there have been points where the wheels kind of felt like they were coming off the car because we either acquired too fast or we didn't hire fast enough or made some mistakes in acquiring. And then that doesn't feel good. And actually, so we started very small. Our size of check has risen over the last seven years and we're currently operating, I think, 30 businesses. So we've sold some of the smaller ones, we've sold some ones that didn't work out. And most importantly, we started to divest. Right now we're squarely focused on bootstrapped B2B SaaS and early days. We acquired some things that didn't fit that before we decided to focus on that niche. So we have divested some businesses to provide more focus. But 30 is still a lot to be operating. And the secret is just I've got a wonderful team who manages the day to day of each portfolio company.

Nice. I guess. How did you get into all this? Like, what made you wake. Did you just wake up one day and say, hey, I want to acquire 50 plus companies? Like, how did, how did this happen?

I wish I was that insightful. No. I had spent 15 years in corporate America at a company called Cerner, which is a software company, but gigantic. When I started, it was 3,000 people and 300 million in revenue. So already quite big. And then 15 years later when I left, it was 20,000 people and I think 5 billion in annual revenue. So night and day different from what I'm doing now. But I share that with you to give some context to like all I know about business is the software industry. And I got to do sales and leadership and management and run development teams and customer success teams and got to do just about everything in a software company except for write code because I'm not a, I'm not a developer. And that was a great long run of a career. I was super happy as a great company to work for and I was just ready to do something else. Along the way I went and got an MBA and realized that entrepreneurs, yourself excluded, are not necessarily like geniuses or the hardest working people in the world or have some heroic talent. They just maybe see the world a little differently than other people. A little bit higher risk tolerance, a little bit harder worker. And I just realized I could do that. And so I had always dreamed of owning my own business, but never had the right idea. And so I was kind of getting a little burnt out in my career. Even though I love the company. I had always dreamed about owning my own business and then met and got to know somebody who later became my business partner who had this idea of let's acquire profitable Internet based businesses. And that's really as sophisticated as the idea was seven years ago. Since then, as I've said, we've kind of refined it, but it was the type of idea that fit a lot that I needed, which was independence, bet on myself, chance to make money. But also I have actually a pretty low financial risk tolerance. So when we started to refine the idea and say, okay, we're just going to buy things that are already profitable, so we're not burning cash. Like as long as we run it as well or better than the founder did, everything should be fine. And so that was like a less risky thing for me because leaving a 15 year career already carries with it some personal and financial risk. So just a lot of things colliding all at the right time and place.

Nice. Well, I can guarantee you, you were much smarter than me. I graduated Chico. We call it Harvard of the West. I don't know if you've heard of it.

Yeah, oh yeah. Everybody talks about Chico State as the Harvard of the West.

Yeah, it's a total party school. And I graduated. I graduated with a graduating gpa. The we'll see.

Get degrees, man. That's I've heard. I know a lot of your story, but did you get right? You jumped right in entrepreneurship Am I right?

Yeah. So I've been an entrepreneur, like, my whole life. I did the cliche ebay store stuff I sold. Like, this is embarrassing, but, like, bean babies, World of Warcraft, like, characters, I'd go on ebay. And then I moved into web design for, like, local bands at my high school and then businesses. Like, I nerd. I get nervous when I meet, like, a founder of, like, a really successful, successful company for the education.

You were there. Because it's not like whatever, whatever grade you were getting in your US History class was even less relevant than for most people because you knew you were already on the right path. Right. Did you ever consider just like, dropping out completely? Because what's the point? Or then you don't get invited to the party?

No, because I needed the financial aid to pay rent. So that was my whole plan going in was like, all right, I got five years to figure this out. Or actually it started with four years. But then I started a company called Business Apps. Was like a do yourself, no code mobile app builder. That started to really take off my senior year. And so I went a fifth year. And the irony is I took a minor in entrepreneurship, didn't go to any of the classes. And I remember I would show up to some of the classes just to play around with the teachers and be like, hey, guys, I just want to let you know, again, I'm not going to be able to attend. I have a business that I am currently working on. But have fun learning how to run a business. And the teacher love Professor. The teacher loved it. He was like, that's what. So Chico State does have a pretty good entrepreneurial department. And I, I'm forever grateful for them. But anyway, story for, for another time. But my, my next question would just be, you know, you look at, I, I, how many deals you look at, like a month?

Yeah, we actually, you must not be. Well, let me back up hundreds. And we actually document it for our investors. Like, just, I think they like the notion of, like, okay. And it's like five months. So in, you know, recording in February, we just put out a letter for everyone that says in January. We looked at X number of deals and let's. It was probably 153 or something like that. The, you know, the only ones that made it through the first filter were these 30. And we're down to like, actual investigation on these five and two may have a chance of going to a letter of intent. So we actually publish all that for our investors.

So how do you evaluate those startups like, what's kind of like your sweet spot in terms of like, what gets it over the finish line?

Yeah. So from like top of funnel down, you know, it's gotta be SaaS, it's gotta be profitable. We like writing checks between 1 and 10 million dollars. So those are three pretty quick filters if you're too small or too big. We still get inbound interest from people trying to sell, like, digital marketing agencies. And I love that you can see it's super healthy business. There's nothing wrong with running an awesome digital marketing agency. It's just not something we would buy. And so then you start looking at more of the details of like, okay, what, what niche is it in? Is it something we understand? Is the, you know, we're pretty tech stack agnostic, which other people have criticized me as, like, oh no, you should niche into just one thing so you can hire all the developers for that thing. And while I understand that strategy that would have limited the number of things we could buy. And then you're kind of tied to a stack, which I don't really want to be tied to a stack. We're industry agnostic. Then you just get into the sort of business fundamentals, like, is it a market we like and that we can understand and is it something that we think can continue to grow? Is there a team that's there? And that's not a yes or no criteria. It's just like, what value do we place on this thing? If it's a solo founder with no team and no plan, and if they're gone, you know, the business is hosed, well, that, that's a problem. But if it's somebody, a founder who's built up a team and they're ready to step out, then that adds value to the business. Yeah, just the usual. I mean, beyond that, there's not a lot of secrets or, you know, special sauce. Andrew. It's just like, is it a healthy business that we want to own forever? And you know, that's the typical questions that micro require guides people on.

Yeah, that's usually like, I hate the question of like my SaaS variability into that. Like, yeah, like, what are your customer count? Like quality of customers churn market quality of team, quality code.

Like, my answer to that would be it's somewhere between zero and $5 million.

I always say my answer to that is like, that's kind of like asking what's. How much does a car cost? Like, is it a Ferrari? Is it a, you know, or is.

It on blocks in the front yard?

Yeah, like, there's so much variability, so that's a great answer, I guess. Moving to another question I'd love to ask you is, what's your favorite acquisition that you've done at sureswift? And then I want to know also your favorite micro acquirer.

But I don't like the word favorite. And it's, you know, like, you got.

A lot of kids, so you can't pick a favorite.

Yeah, I. I also. I was trying to think of a different example because I actually have children, and I don't like comparing businesses that I own to my children because there's like a. I love my children way more than any of our businesses. But, yeah, it's hard to. It's hard to pick a favorite because there's things to like about all of them. Two that are cool stories, let me put it that way. We own two sister companies. One is called MailParser, one is called DocParser, and they were created by the same founder. His name is Moritz Dausinger. And we tell the full story on our blog if people want to learn more about it. But part of what I love about those businesses, it's been a really successful acquisition. You know, it's hard to love a business where you're losing money or it's a failure. And we've had some of those, too, so it's been a big success story. We bought them separately, so we bought Mail Purser first, and Doc Purser existed, and Moritz was working on that, and I tried to wrap both into the same deal. And Moritz was like, no, no, I'm not selling Doc Parser because it's going to be worth more someday. And so we worked into the contract like a first writer refusal, you know, agreement where, like, if he'd wanted to sell Doc Purser, he was obligated to at least let us know. But the cool part of the story is, like, we. We became friends. We stayed in touch. We had been operating MailParser for, I think, like a year and a half, and Moritz and I were just talking on the phone, and it was sort of like he. He said, he's like, kevin, I think we both know how this ends. Like, you're going to want to acquire Doc Parser because it's. It's going to be just as successful as Mel Parser. And he's like, I'm going to want to sell it to you because the first transaction was a home run for everybody. But he's like, the longer I held onto it, the more valuable it's Going to get. And so what do we do? And I'll skip to the end of the story. We worked out a deal that was really good for both parties. He left really happy. He's on to now his third, actually, his third project that I know about. He's got other startups that predated Melparser. We're super happy. We've been able to create jobs for now, like, 15 people. And it started with, like, you know, two and a half. And so just a home run all around. And my favorite part, I just saw Moritz in October in Mexico City, and we're just, like, laughing and sharing a beer and, like, he's become a friend. And so, like, from every angle, it's just a wonderful deal. Do you know what I mean? Especially the personal connection and just about every other business that we have, there's something missing from the story that I just told you. Not, like, we've done a lot of really good deals where we're tight with the founders and everybody's happy, but not quite to that degree of, like, awesomeness stacking on top of itself.

Nice.

And so that was long before Microacquire ever existed. Except for maybe in your head.

I've heard that. I've actually read that story. And when I read it, I was like, that is badass.

Have you? Yeah. Cool. I'm glad you saw it, because I.

Follow him on Twitter as well.

Yeah, well, and you. You missed out on Founder Summit. You would have been sitting at a table with us having a beer, but you had to. You had to bail at the last minute, remember?

Yeah.

That was why we were together.

Yeah. I would have given you Covid.

Yeah.

Okay.

I forgot why. I figured it was something like.

Yeah, I was. I was, like, exposed, and I didn't want to risk being in quarantine in a week for, I think it's two weeks or something like that.

But, yeah.

Yeah.

Well, there's a risk you would have flown down there. Like, we tested everybody, and if you were positive, you know, couldn't get into the event. So next time, you and me in Moritz can all sit down and have a beer together and tell business stories. But back to your question again, not my favorite. There's three deals that have at least been listed on Microacquire that we have acquired. And I say three that have been listed because one of them, we actually felt pretty good that we were going to get a deal done. And, well, I'll just tell you, this one's meet Edgar. So I don't know if you know, Laura Roeder, we just announced that we acquired Meet Edgar a few weeks ago. And I've known Laura for four years, and we were kind of in discussion. She reached out to me directly when she was thinking about selling the business. We were talking, doing our diligence, et cetera. And she's like, look, Kevin, I think this has a good chance of us doing a deal, but I have to list it on micro require just to see if somebody will, you know, come out of the woodwork and overpay, give me a strategic multiple, whatever. And I was like, I totally understand that. Good luck, you know, and we'll continue talking. And it ended up we. I don't. I think I know she had interest in offers for Michael Acquire, because, like, who doesn't when you list a healthy business? But we ended up doing the deal together. And that's another one that I'm super excited about and really think very highly of Laura. But I don't count that as like, we didn't find it on Microacquire. So I'm not. I'm going to set that one aside. The one that we found on Microacquire, that is my favorite is lead dyno. And I don't know if you ever, like, talked to those guys, but it was the reason why I like that business. Not just because it's a super healthy business. And, you know, the founders are great people. They went through two processes that fell apart. And I think this is part of when you and I talked in the early days of Microcar, I loved that it was focused on founders and helping founders find exits. And these, these three guys, Brett, Mike and Carson, were business partners for, I think like seven years. They decided to sell the business for their own reasons that I won't get into. And they had two prospective buyers that had written them letters of intent, and the deal went sour. And I can't remember the details or the reasons why we talk about this again a little bit in the blog, but it's kind of their business, not ours. And they found us. Well, we found the business through Microacquire. We start having a conversation and you could just feel the stress come out of their shoulders. Once we got a little bit into the process and Mike, who was leading for the three of them, he's a CEO. Once we got to a level of trust where we'd had enough conversations, he kind of believed what we were telling him. We liked the business and kind of broke through that surfacey layer stuff. We're just talking about the Real details.

Yeah.

He told us that he had been burned twice and it wasn't through their fault. It's not like the buyers found something in diligence that spooked him. It was just bad buyers, like is the easy way to say it. And he's just like, I feel so much more comfortable. Like we've been, we've been bitten twice and everybody's spooked that this is going to be a third strike. And I don't know if we can handle that as a founding team. So what I like about it is yes, we've got a great business, we've got a great team that came with it. The founders are happy but the fact that they went through that turmoil and we provided a safe landing spot for their business and it's a stressful deal to sell a business. Like there's no stress free event where you're selling a business but minimize the stress as much as possible and just let them know like, look, we got you. We're not those other people. This is going to be a simple, straightforward, honest transaction. Let's, let's get down to business. And that's, that's, that's why that's our my favorite from micro require so far.

Nice I, I and, and compliments to you. Also a nice shirt. I'm wearing your swag as well.

Yeah.

How do I pull it up? There we go. There we go. I mean I've just, I've heard so much just good feedback from buyers and in terms of short swift and that's, you know, genuine feedback in terms of, you know, Chris on our team, I've interfaced Selena. Everyone is just fantastic over there. So that doesn't surprise me at all.

Yeah, I got one of the nicest emails ever was somebody telling us he's not going to sell his business to us. And he was like, this has been the greatest experience. I've learned a lot. You've been really good to me and my partner. We've decided, I think they decided not to sell or, but they may be selling to somebody else. But it was just such a, it was not about me as a compliment to the team and they were. Because that's what we care about, that's what we try for. You know what I mean? Yeah, it's like you getting a email from somebody's like the micro acquire experience was perfect. And you know, at the end I sold my business. But I care about the founder experience and I know I just told you we look at 150 deals and we might close one. So 149 people are going to have some sort of a Sureswift experience that doesn't result in selling their business to us. And I care about all those 149 people too. I want them to have a good experience with us. And so, yeah, I'm happy to hear you get that feedback too, because we, we work hard at it and we think a lot about it.

Nice. I guess. You know, moving on to, you know, ways to help founders. Any, like, helpful tips for founders, you know, looking to sell their business this year? Like yellow flags or just things to prepare for? Like, if they were looking to go to market, like, if you had to just give, I'm sure you could give like 20 tips. But if you had to pick, like, maybe the top, like three, you know, what, what would you tell a founder aside from having a great business? We all know that one, yeah, have.

A great business is the easiest way to sell business. So I, like, the simple answer is like, be, be honest and straightforward. And that, and what that means depends on what stage you are. So, like, I tell founders all the time it's okay to initiate a conversation or talk to somebody like me who buys businesses, even if you don't intend to sell your business for two years or even if you think you may never sell your business, right? And at the end of the day, like, every business gets sold, right? Or every, every founder leaves their business, whether they sell it or they get put in the ground. So it's okay to have a plan, even if you don't want to exercise that plan for five years. Because I see people at conferences or online or whatever, and it's always this, like, well, I'm not ready to sell my business, but how does it work? Explain to me this or that or, like, what happens to the team. We get a lot of the same common questions, and I'm just like, that's fine, but you don't need the preamble of we're not ready to sell, but it's okay to just like, ask the question, explore. And so in that, in that stage, being open and honest and forthright is just like, look, I don't have a whole bunch of diligence stuff like, we're not going to get into a conversation about, like, what's my MRR and my churn or whatever. Like, just set expectations. Like, I just want to understand how your process works. And I'm not, I'm not looking to sell right now, but I want to be more informed for a year from now and then, if you are like a little bit more serious to where you might want to list on Micro Acquire, you know, you got to be honest and straightforward, like have your stuff in a pile, you know, like have yourself organized. Your, your website, Andrew, tells everybody the questions that they should expect from buyers. It's not a secret. And if you don't have the answers to those questions, like just wait or get, get those answers written down. Like the, the, the transactions where the founder is ready make everything so much easier. And it makes me more confident that if they know how to come into this conversation, they probably are doing a good job of planning and organizing their business. So that's kind of that middle stage where you, maybe you're just kind of testing the water, just looking for valuation, but I can't give, like you said, I can't give you a valuation without some sort of information. And me giving you evaluation is not a commitment to buy and you're not committing to sell. It's just a phase in your journey as an entrepreneur. But then when you are ready to sell, be prepared for the full inspection of your business. And don't hide anything because we're probably going to find it and at some point you're going to have to let somebody else look at the code to make sure it's not crumbling. And like, you just got to be prepared for that. And, you know, hiding things or misleading just erodes trust and it might just mean, like, we walk away from the deal. So that's kind of just like my advice would be be honest and transparent, but understand what stage of the process you're at to know what level of transparency is important.

Yeah, I like that. I think, you know, I, I did a lot of those things correctly when I sold business apps, the company we were previously talking about, and then incorrectly before I sold it. Like, one weird thing that I think a lot of founders do, and I did it too, is where you do this dance of like, we're not for sale at all, but, but I'm curious, but it's so much easier. And then once I started building relationships with people in advance, like you just mentioned, and saying, look, I'm going to sell this business at one point in time, I want to keep you updated. And I would update buyers almost like you would update investors, like, hey, we were just featured in this blog or we just announced this new product launcher. Here's you know, kind of how the business is trending. And I would do it, you know, quarterly. And then when the time came to sell it was. It just cut out a lot of the, you know, like, are you serious? You wasting my time? Like, you know, so I think a lot of founders, like, don't understand. Like, it's okay to just say I'm looking to sell my business. Like, do you want to have a conversation around that?

Yeah.

Rather than doing this weird dance, hoping to get some crazy multiple.

Um, well, and I also want to, like, make clear it's also okay to say I want to understand the process so that when I am ready to sell my business, I know I understand it better because I'm not ready right now. You know, Like, I'm happy to talk to founders all the time, just about, like, where are you? Like, what's working? What's not working? Can we help? Do I know somebody else who can help? Like, I'm not saying I only want to talk to people when they're ready to sell, but just. Just know which stage you're at and be honest with the person on the other side of the conversation about where you're at. And then that just sets the tone for, like, okay, now I know what conversation we're having.

Yeah, I agree with you. I was referring more towards, like, we would get inbound requests from, like, strategics. And when I think back, I'm like, I should have handled that. Like, yeah, we're open to a conversation, but it was always like, a guarded, like, if you say that, like, you're open to selling it, like, devalues you when it really does kind of the opposite sometimes.

That's a good point. I like to think of it as, like, everything's for sale and we're on the other end of this, Andrew. So, like, people, we get inbound interest for our portfolio companies, right? Like, really frequently. And my answer is always like, well, we're not planning to sell it, but everything has a price. So, like, you know, we. That's. That's me coming into the conversation. Like, I love this business. I'm not looking to sell it. Sometimes we'll just tell people outright, like, here, here's our current revenue. If it's less than a 10x multiple on the revenue, then we're not interested. And that makes it like, here's, you know, my number, and, you know, I know you got a due diligence. Like, can you get to that number or not? But I'm saying, like, if that's out of the ballpark for what we're talking about, then let's just not, you know, waste each other's time. There's A way to handle it with. And I'm being like super direct in this conversation. I might like massage it a little bit with the actual conversation. But yeah, it's totally okay to say like, let's have a conversation.

Yeah, I agree with that. And I guess, you know, a follow on to the point I was making was just the lack of education in terms of like how to position your business to be attracted because, you know, you look at a lot of businesses and when you're talking to a corp dev team or something like that, they are also looking at a lot of businesses and getting inbound requests. And so if you do this weird dance where you're like really held off, at least this is just my experience, it tends to push off the buyer because they can't tell if you're serious or if you're waste just wasting their time. So I always just like going back to your first point is just being honest, like where are you at your stage? What are you looking for? Is it advice? You're looking to sell your business? You're looking to just kind of, you know, test the waters? Like, where is my valuation at? So that's, that's really good advice and I guess any, any, anything else you'd add to that?

Yeah, I. Part of what I love about Microacquire is that, you know, it's intended for founders to help them be successful. And I think at some point of growth or stage of a business, it's part of your obligation as the first founder, CEO, whatever title you want to give, to start thinking about these things, whether you have investors, you've got a co founder, you've got a team, or what. Even just for yourself personally, this is part of the evolution of being an entrepreneur. You need to understand what it's like to sell a business even if you're not in the market right now. So it's going beyond what you're saying. Andrew. What I wanted to add is it's good to educate yourself. And I'm almost like you're obligated to educate yourself so that you're ready for that evolution of the business because unfortunately sometimes it comes quicker than we're ready. And we've seen a lot of situations where people are sort of forced to sell a business for one reason or another. And if you haven't at least thought about these things, haven't had a couple of conversations, haven't like documented the things you're going to document, you're going to sell at a, you know, a discount.

Yeah, I think you Know, I. I think back of my. My younger days, and I used to just think, you know, getting acquired was like GoDaddy showing up with a check, being like, hey, welcome to GoDaddy. Like, we're. We're gonna acquire you.

Yeah.

But, yeah, just understanding. Just like, you know, the more you know about, like, an acquisition process, the higher your chances of successfully closing a deal. So I totally agree with you on that. So moving on to just, like, the final questions. So we've had a crazy year in terms of, you know, M and A activity, 2022. It's hard to predict the future. Any sort of, like, thoughts on, you know, maybe what's next for SureSwift? What's next for the industry? Upcoming industry trends? Like what. What's something that maybe you'd make a bet on? Could be a growth goal for sureswift. It could be the market. Just any sort of, like, unique industry insight that you might expect to play out this year.

Yeah, that's a tough question. I'm not a gambler, so I don't like making bets. But so the simplest question to answer, because I know the most about it, is like, what's in store for SureSwift? And it's been seven years and we've done a whole lot of things wrong, and there's a whole lot of things we can still improve upon. That said, I'm so confident in our team, our process where we sit in the market. I'm like, we are just going to not be distracted. I feel like we are one of the best, if not the best company in the world to acquire bootstrapped B2B SaaS, businesses between 1 and $10 million in value, full stop. Let's just do more of that and be even better at that. And by more, it doesn't necessarily have to be more deals, but there's like, more of the right deals is all I want to think about. And like I said, every once in a while something comes in that looks shiny and different and cool and look would be a wonderful business to own. And I'm like, nope, no distractions. So I think that's what you'll see from us is like, nothing super, you know, different or, you know, other people might say, not that interesting. We're just going to keep being awesome at what we're already really good at. As far as the market, I mean, you're better to answer that question than me because you just have a different lens and you see it from so many different angles, like founders and, you know, Buyers and investment vehicles and things like that. I'll tell you something I worry about and I would like to get your perspective. I could turn the questions around. Is part of the greatness of Microacquire is it's made the process easier for founders. It's not like the buyers found something in diligence that spooked them. It was just bad buyers is the easy way to say it. And he's just like, I feel so much more comfortable. Like I don't know if we can handle that as a founding team. So what I like about it is yes, we've got a great business, we've got a great team that came with it. The founders are happy but the fact that they went through that turmoil and we provided a safe landing spot for their business and it's a stressful deal to sell a business. Like there's no stress free event where you're selling a business but minimize the stress as much as possible and just let them know like, look, we got you. We're not those other people. This is going to be a simple, straightforward, honest transaction. Let's, let's get down to business. And that's, that's, that's why that's our my favorite from micro require so far.

Nice I, I and, and compliments to you. Also a nice shirt. I'm wearing your swag as well.

Yeah.

How do I pull it up? There we go. There we go. I mean I've just, I've heard so much just good feedback from buyers and in terms of short swift and that's, you know, genuine feedback in terms of, you know, Chris on our team, I've interfaced Selena. Everyone is just fantastic over there. So that doesn't surprise me at all.

Yeah. And I got one of the nicest emails ever was somebody telling us he's not going to sell his business to us. And he was like, this has been the greatest experience. I've learned a lot. You've been really good to me and my partner. We've decided, I think they decided not to sell but they may be selling to somebody else. But it was just such a, it was not about me as a compliment to the team and they were. Because that's what we care about, that's what we try for. You know what I mean?

Yeah.

It's like you getting a email from somebody's like the micro acquire experience was perfect. And you know, at the end I sold my business. I care about the founder experience and I know I just told you we look at, it's made Deal flow easier for prospective buyers. And that creates a super healthy marketplace. My concern is that I know there are bad actors in this. Well, just in the world, but in the buying and selling of businesses. And I worry not for the health of microcar, but like 150 deals and we might close one. So 149 people are going to have some sort of a sureswift experience that doesn't result in selling their business to us. And I care about all those 149 people too. I want them to have a good experience with us. And so, yeah, I'm happy to hear you get that feedback too. Cause we work hard at it and we think a lot about it. I don't know, I don't know how to phrase it, Andrew, but like, I worry that there's going to be bumps in the road here as our industry continues to evolve. And I'm super bullish long term, but I worry about short term that not everybody knows that there's bad actors and not everybody has felt the sting of doing a bad deal. Sort of like I was listening to somebody talking about just investing in general. And we've been on the longest bull run of your and my lifetimes. Right. And literally have heard investors say, I don't really know what a downturn looks like because I haven't lived through one. And we've had 08 and all this, but in general, everything's up and to the right. And I worry that in our space, nobody's seen a big failure, not enough people have seen failure. That everybody thinks this is easy. Maybe that's the simple way to put it. Your marketplace, people like us, others documenting. Here's how I did it. Here's the success. You buy a great business, you do the right things, that business should continue to grow and not there's not enough. It almost makes it look easy. And I worry that too many people are going to step into this with either their own money or other people's money, thinking it's easy and get hit by a train. Is that something that you see or worry about or am I just like making things up here?

I mean, you could also say, you know, anyone who starts a startup is an idiot because the success rate is, you know, 10%. You know, if, if anything, I would say I'd go back to some of your previous points where you acquired companies and it didn't work out. You know, sometimes, you know, if you're worried about people buying a company and not working out, you know, that's, that's Part of the process of, like, I've failed so many times to, to be successful at stuff that I do. And I think that's a part of the reason that you're successful. So, I mean, yeah, I think people are getting a little, a little fast and loose, but I don't, I don't think it's a concerning problem to the point where it's like, hey, just buy Bitcoin. Like, just buy Bitcoin. You can make that sort of argument against any sort of investment, whether it's starting a new business, whether it's buying cryptocurrencies, whether it's buying an NFT or something like that, angel investing. So, yeah, I mean, I think just the more education that we create where we educate both buyers and sellers on, you know, how to properly do an acquisition, like, what is your plan post acquisition? I think that's how, you know, the market will mature and then will really grow and bring more opportunities to founders looking. Because what I think is going to happen is, you know, for the past two years we've just had, you know, let's call it like 100 PE firms that would be willing to buy sub, you know, it's called 20 million businesses. And I think with the right tooling and the right guidance and even through advisory services that we provide within Microacquire, so you can hire an M and a advisor, you can hire a due diligence expert, you can hire someone for valuations, you can hire an attorney. And I think the more that we equip people to essentially create their own private equity firms with, you know, all the tools that people kind of like yourself had to put together over, you know, a period of seven years, I think we can reduce that risk. But yeah, I mean, there's always a bad angel investment, there's always a startup that fails, there's always an acquisition that goes south. There's, I think it was a founder of Cisco that said one out of three acquisitions that they would do would fail. So even at the top, you know, so just a disclaimer for people listening to this. Acquisitions are hard. You know, they're, they're not easy. Number one, you need the capital. Two, you need to know what you're doing in terms of if you don't have any experience in SaaS and you're acquiring a bunch of SaaS companies, like it's going to be a big learning curve, but you are kind of skipping over, you know, the product market fit stage. So I always recommend start small. Hopefully if someone acquires a company, it doesn't work out. It's on the smaller end. But candid opinion? No, I don't see it being an issue. I think the bigger issue is probably just founders selling their companies for too cheap and using advisory services that charge too much. What's your take on that?

That was one of the. When you first told me about MicroCard, that was the killer feature for me. After you kind of laid out the vision of what you were trying to build, I was like, I don't want to be a broker in five years because especially in our space with like SaaS and online businesses, they charge hefty fees and I'm not sure they deliver. And I know lots of brokers in this space have done business with lots of brokers. They're good people. It's a reasonable business model. But your business model puts so much power and control in the hands of founders at a way lower price. Which can be free. Right. Like, is it true you can still list and sell a business I might require for free versus a huge percentage? Yeah. So that I do think that is a, is a big. Will continue to be a big trend that we see. And back to your earlier point, like, I guess it's, there's inherently risk in business. We all know this. I just hate seeing people like lose money and fail when they weren't going into it. Eyes wide open. But that's not my problem to solve. And I think you're right. If you're educating people and trying to help people along the path of like, here's the things to do to lower your chances of failure or at least understand the risk that you're seeing. That's all you can do. And all I can do is tell people, here's my experience, here's some things to look out for, here's some ways I've failed. Like, try not to do those things. You know, go invent all new ways to fail. But know that failure is part of the deal when you're, you know, running a business. So yeah, I like, I like your, I like your lens on it. It's just like that's, that's, that's the deal with startups.

Like, you can't just high a high risk.

A high risk deal.

Yeah, you know, there's, there's no, I mean this would be a funner, longer conversation of just like how to, how to de risk acquisitions or how to de risk even launching a startup. You know, there's, there's so much education out there and I think that's where it really starts is learning from other people's failures and mistakes. And I think the more that people share those publicly, the more they can help other people not make those same mistakes. Because a lot of the mistakes that I see with startups or, you know, acquisitions, I haven't really heard too many in terms of acquisitions, aside from.

You.

Know, code being awful, had to rebuild, you know, the code base, stuff like that. But, you know, that stuff being shared, like the common pitfalls of an acquisition, you know, people can learn from that and then avoid those mistakes. But yeah, with any sort of investment or any sort of, you know, entrepreneurial endeavor, there's a very, very high risk failure. It's literally you have, you know, a 10% chance of success starting a business. I would argue your success, your chances of success when acquiring a business is probably higher because you're skipping over, you know, some of the hardest parts like finding customers and product market fit. And then you might be using like you might budget 50k. And I have friends who, you know, go up to like 150k and they still aren't there. So probably, probably, like, we could probably talk about that for a while. But I get what you're saying in terms of, you know, as the buyer pool increases, not all of them are going to be, you know, as sophisticated and as experienced as yourself. And so at Microquire, what we're trying to do is build tools that help with things like you have a due diligence team like other people don't. Like, what if there was tools for due diligence? Or what if there was, you know, tools that basically automated, you know, the legal document creation or, you know, allowed you to, you know, find an advisor to help with, you know, the whole process, like when you need it. Just to point out any yellow flags you might not be catching. So yeah, awesome.

I think it's a huge service the whole, the industry and you're like, if the chances of failure of a startup are, are 90%, the chances of failure for an acquisition should be way lower or chances of success be way higher, depending on, but it's never going to be zero. The thing about an acquisition is you still have just life and business is unpredictable and there's inherent risk, but in terms of wrong price, tech blowing up on you, team issues that you didn't know about, legal issues, you know, the contract, things that there's, there's a relatively, it's not a short list, but there's a list, it's a countable list of things that are the Predictable things that go wrong in a business of, you know, a certain size and you know, people like you, people like me can share to the world and others, like, here's our take on that list of things and here's what we look at in our diligence and here's what we care about in terms of the transition process and, and here's the things that we've done wrong so you can learn from them. And it is, versus like a startup is like the universe is so big for like things that you could start. You don't even know where to consider the risks. Right. Because it depends on the market and the pricing and the customers, and it's just infinite than the number of risks that you're facing starting a company, any company, but an acquisition is a, is a more straightforward thing to consider and people can get educated if they take the time and energy to do it to lower those risks.

Yeah, no, I completely agree. And I think it'll be interesting to see how, you know, the next. This is probably like way this, this. I, I don't even want to talk about this because it'll, it'll take us down a rabbit hole. But like, are we in a, in a bubble? Like, you know, like, if we see an economic downturn, how is that going to affect acquisitions? So that'll be interesting, but we'll maybe we'll see. We'll save that one for. I don't want to, I want to, I don't want to put an opinion on air where, where I think we're at, but I will tell it.

I would give, give you a prediction here. You're like, yes, we will see a downturn. We may be in the middle of it right now, middle of February 2022. And inherently that means other people, people have less cash than they thought they did 45 days ago. And that may sort of slow acquisitions or reduce prices. People are willing to pay, but it is not going to. It is not like your activity. Your market, Andrew, is you're never immune to the macroeconomic trends, but I think you're pretty well isolated. And my market, I don't really care what the worldwide economy does. There's hundreds of thousands of startups out there who want to eventually be acquired. There's still way more than enough money in the system to go acquire those businesses. I wouldn't sweat it if I'm you or if I'm me or if I'm a startup looking to get acquired in the next one to two years.

I have one data point that I'll share is when I launched Microcart, it was two months before the pandemic started. And then when the pandemic started, that's when we really started to. And I couldn't figure it out. I was like, what's going on? And I think it was because people were trying to buy alternative assets rather than the stock market was cratering. Even bitcoin was cratering, which was weird because the whole point of bitcoin was when the world correlated. Yeah. So maybe we'll revisit this on another podcast and see.

It'd be interesting because the timing, you were relatively new. Some of that takeoff that you're describing might have just been the world figuring out that micro require is out there. So it'll be interesting to see with a longer lens over a period of now it's been two years. In five years, 10 years, you're going to see multiple cycles, big and small. I think that same thing is always true when the stocks tank, people want alternative assets. But it was also such a dramatic event in the economy and so new in microacquire's existence. You want I. You. It's hard to like, directly predict. Like, okay, this means that. You know what I mean?

Yeah, I wouldn't bet. I wouldn't bet on it. I was just saying there, what's the term? Correlation does not mean causation. Yeah, it was just something interesting. It could have been just, you know, I don't know, March was the month or whatever. Maybe. But I just, I do remember it and I do think about it sometimes. Like, huh, if the market goes down, obviously start evaluations go down, and then there's buyers with dry powder. Does that increase acquisitions, decrease acquisitions? I'm sure I could, you know, probably do an analogy with homes or something like that, but we'll just have to wait and see. But I got three more questions for you and I'll let you go. Does that sound cool?

Yeah. Let her rip.

All right. Favorite book?

Favorite book. So the two that came to mind, I feel like I don't know if they're actually my favorites, but the two that came to mind are the Alchemist by Paulo Coelho. And that's not, you know, it's not a business book. It's more of a life book and one that you can read over and over again and you learn something each time. And then as a founder and CEO, one of my favorite, most memorable books is Let My People Go Surfing by. I don't know the right way to pronounce his name. He's the founder of Patagonia. And that's a company that just thinks a little bit differently, does things differently. And it's the history of the company and a view inside their culture and a view inside the mind of like a really interesting, cool founder who you could tell from the beginning it was like, yeah, we so sell clothes and gear. But it's about our people and the culture that this guy, Yvonne Chouinard, I think is how you pronounce it, but I'm not sure. So those are the two, first two books that came to mind.

Nice. Who is an entrepreneur that you admire and respect? And it can't be Elon Musk, because everyone says Elon Musk.

I never would. You could ask me to list 20 and I. I wouldn't get to Elon Musk. Not that he's not a super smart and super successful guy. He's just not. Wouldn't be on my top 20 list. Maybe that's controversial, but yeah, that's definitely. Let's call it a non conformist.

You're a contrarian.

I'm a contrarian. Thank you. That's hard. I kind of feel like I admire almost all entrepreneurs. Not that. Not that all are good, like good humans or nice, nice people, but like just the guts to try to do something and invent something out of nothing and like create jobs for other people. Man, that's really. I feel like I should have a. Like a Mount Rushmore of like the four people that I admire most.

Michael Jordan, Tom Brady, Babe Ruth.

You're all sports. Mount Rushmore. I don't know. Sorry. I wish I had a better answer for that, man. I just.

Rooting for everybody. That's a good answer, man.

There's room. There's room for everybody. And on it, like, I'm not gonna.

Lie, that's my answer.

And you know, like, there. There's a woman who just who. Who is in my hometown of Minneapolis. She runs a really amazing. Let me. I'll give you her name. Her name's Heather Manley. Nobody's nobody outside of Minneapolis has probably ever heard of her. She has an amazing IT firm. I got to meet her and hear her story. She's built an amazing business. She's a good human. Everybody loves her. She's just started a liquor brand called, called Crooked Water, and that is also amazing. And she's got a third business that she's starting that is in a completely different vertical. I think it's a restaurant. Yeah, I think she and her family started a restaurant and like, that is also amazing. And so, like, she's a repeat entrepreneur. She's a good human. I don't think we celebrate female entrepreneurs enough in this country.

I would agree.

And so. And the reason why that, like, sparked a thought in my brain is that, like, you don't have to be rich and famous to be a successful, admirable entrepreneur. Like, I think she's pretty well off. People around here knows who she is, but I would never expect you to know who she is. I love people like that. It's just like doing it, building great business. Not doing it for fame or glory, just doing it for the love of the work and to create jobs for people and to put something awesome out into the world. Like, there's 100,000 of those people right now just, like, slugging it out and hitting. And those are the people that I. And that's part of why, like, glorifying Elon Musk. I'm just over it. Like, great company. Like, Tesla, cool. I wish I had one. But, like, can we talk about other people for a little bit? You know, that's my. That's my. My beef with Elon.

Yeah, well, he is. He'll put you on Mars one day.

I don't want to go. That's another thing, like, cool science project, bro. But, like, I'm not interested. I'm perfect.

I'm not going either.

I'm not on a planet where you can be outside.

I like Earth. I'm good. I'm good. Everyone in my neighborhood drives a Tesla. It feels like every house came with a Tesla, and I don't have a Tesla. But. But this has been a wonderful conversation, Kevin. And again, I'm the huge supporter of everything that you do for founders and all the education you put out to founders. And it's. It literally, I. I think I've told you this, but when I launched Microquiry, you were one of the first to publicly support it on Twitter, and it meant a lot to me.

It was just authentic. Man. I love what you're doing.

That was. That was two years ago.

Yeah. I can't. It feels like five to me. Honestly, like, the problems that you and your team. To me, it's amazing. I love those tweets. We put a couple in our newsletters to our. Just our new newsletter list and to our investors, like, it's like, once a month, you're like, oh, hey, it's. We've listed this many businesses, this many exits for this much dollars. Happy Tuesday. I love that. It's like. And every month. It's like bang, bang, getting bigger and bigger and bigger and bigger and. And I think you and I know, like, the numbers are mind blowing and it's still just the tip of the iceberg. Like, it's, there's so much room for you all to grow, for us to grow, for. For startups to exist and be acquired and like, it's just a, it's an exciting time, man. And I, I love what you, you all are doing and you know, it's a, it's an honor to be here and talk with you and chat about it. It's really fun.

Yeah, likewise. Well, Kevin, I, I appreciate you and definitely, please tell the whole team at sureswift, they're awesome. I, I appreciate all of them. And I guess, final question. If people want to get ahold of you for, you know, advice, maybe they're looking to sell their business. What's the best way to, to get in contact with you?

That two ways. So I love chatting with people on Twitter, you know that. So It's Kevin underscore McArdle. And McArdle only has one A, not two, or sorry, one C, not two.

We'll put that in the show notes.

Yeah. Or sign up for our newsletter. It's called the Founder Squad. You know, hit our website, you'll get a pop up and we, we put stuff out to anybody on our list once a month. And it's usually tips, links, things we're learning, you know, from others and things we want to teach people. And that's the best conduit to just like get a steady, slow drip of like, this is sure swift. So either of those ways.

Right on. Well, Kevin, thank you so much for your time. Appreciate you hopping on this podcast with me and I'm ready for you, man. I think it's going to be a big year for you.

Likewise. I'm excited for both of us.

All right, cheers, dude.