Startup Acquisition Stories Podcast with Derek Morin and Radu Bogdan, Founders of Tabarnapp

Foreign.

I'm here with Derek Marin and Bogdan, the founders of Tavern app who recently got acquired. How you guys doing today?

Fine. Fine.

Yep.

So for those that may not know about your startup or either of you, do you want to give just a brief introduction of yourself and the startup you had acquired?

Yeah, yeah, I can start or start?

Go ahead, start. I will go. After you.

So Bagan and I were, we've met online, like almost like online dating like eight years ago, nine years ago. I posted a job. He replied with the script. He didn't ask for money. He just told me, well, if you like it you pay. If you don't, you pay. And well I, I kind of him gently and funny. And so we started to work together on some projects, website apps and stuff like that. And then 2016 we've built our first Shopify app was called Automatic Discount. We've noticed in the forums everyone was complaining like why is Shopify not able to do something very simple as automated discount based on what's in the cart. So we've built this app and within three or four months we got like 1,000 customers paying for the app. So we were okay, I think we, we hold something now. So slowly but surely we kind of ditched all of our service based clients to focus on that. And well, long story short, we sold like two weeks ago to a company called Stay Tuned.

So that's, that is a thousand customers in the first month.

Really it took us by surprise. We didn't expect it either and we weren't prepared for that.

That is a very, very strong sign of product market fit. So congrats on that.

I mean for other apps we also decided to list it on Microacquire. But this was actually an hesitation. Do we go with a broker or do we go with Microacquire? Because we've spoken with some people and people were like, maybe you should go with a broker. It's easier to sell a bigger business. But there's some downside, like he's taking a percentage or so. So this is what led us to actually go with a broker to sell the big, the bigger business. So the broker built like a information memorandum, I think it's called like a PDF of 60 pages plus. Really, really nice. Like I was, I mean it was so appealing to be honest, that I wanted to buy myself the business. And then like for he contacted his own networks. I think he sent like 12, 15 emails, I don't know how much but not that many. And then kind of quiet like the market like the Stock market was down. Like we've seen crazy valuation 2020, even 2021. But then at the end of, I mean, in the middle of 2022, when we actually decided to sell the business in, in June or May, everything was going down. So it was silence, like for a few weeks, like nothing. So I told his name is Attila from IRI Capital and cheers to him, by the way. I told him, can you, can you list it on Microacquire? Like so at the beginning was like, I mean, I was not sure if we would accept to get, I mean, a broker using Microacquire to sell, which Microacquire I think was built to skip the brokers and skip the intermediate. So and, and he said yes. So he posted it on Microacquire. At this time, I'm not sure how many requests he got. I think he got a lot. He was, he was behaving like as the filter. I've never spoke though to anyone via Microacquire myself. So I think at this time there was maybe some features lacking. I've logged in recently in Microacquire. I've seen it's improved a lot. Like automatic NDA signed like the step by step flow to sell your business. It's really, really nice. But I mean, for other apps. We also decided to list it on Microacquire, but this was actually an hesitation. Do we go with a broker or do we go with Microacquire? Because we've spoken with some people and people were like, maybe you should go with a broker. It's easier to sell a bigger business, but there's some downside, like he's taking a percentage or, or so. So this is what led us to actually go with a broker to sell the big, the bigger business. So the broker built like a information memorandum, I think it's called like a PDF of 60 pages plus. Really, really nice. Like I was, I mean, it was so appealing to be honest, that I wanted to buy myself the business. And then like for. He contacted his own networks. I think he sent like 12, 15 emails. I don't know how much, but not that many. And then kind of quiet, like the market, like the stock market was down. Like we've seen crazy valuation 2020, even 2021. But then at the end of, I mean, in the middle of 2022, when we actually decided to sell the business in June or May, everything was going down. So it was silence, like for a few weeks, like nothing. So I told his name is Attila from Ari Capital and cheers. To him, by the way, I told him, can you, can you list it on micro acquire? Like so at the beginning was like, I mean, I was not sure if you would accept to get, I mean, a broker using microacquire to sell. Which microacquire I think was built to skip the brokers. Yeah. So I mean, maybe I talked too much. But the point is he listed on micro choir and then we kind of waited and then the negotiations started with the, the, the, the leads that he brought like his own network. Brow.

That'S awesome. And for, for those, I don't know if even both of you, you know this, but micro part, we actually, we have a lot of brokers that actually list on micro buyer to help find because all the buyers are there and then so they list and they can find a buyer at no cost. And then I, I sometimes recommend a lot of startups use a broker depending on how big the transaction is going to be. Because like you said, you'll have a information memorandum or it's called a sim, a confidential information memorandum. It's like a fancy word for like a reverse pitch deck. So just having that support and just, you know, kind of almost, you know, advisor slash therapist if you will, you know, when the transaction is going to be a life changing amount. So within microcur we actually have a network of brokers that we can recommend to you if you ever, you know, need one or something like that. But I'm glad, I'm glad it all worked out. I guess my next question would be, so you sold a business previously and that went well and then you had a larger business that you wanted to sell, did that make you more comfortable going through the acquisition process the second time? Given that you had already sold a business prior, you had kind of gone through the motions, if you will?

Yeah, that's a good question. Well, I would let maybe Bogdan speak about that because we had like, I think we were not on the same page when we decided at first to go with the broker. I'm not sure how you felt bugged. And then I can share how I felt as well.

Yeah, well, I'll go ahead and say why I liked the idea of a broker and I thought of him like the training wheels. You want the training wheels when you do something big for the first time. And my main point for why I wanted to go with a broker as well was because he provides you more insights and he has better experience than us and he's less prone to making mistakes than us, for example. So yeah, I kind of wanted to go with someone who was an expert in the domain developer.

Yeah, sorry, sorry.

Go, go ahead.

No, but I mean to answer the question, I think like I was not sure like to let the stranger like because Andrew, you asked about our emotion. Emotions like, like the, the smaller transaction of 40,000 US or something like that on Micro Acquire was like for us more like a bonus. We didn't expect that. We were about to. I mean, I mean, I mean sorry for the person who purchased that that listens to the podcast. But we were about to shut it down because we, we. Yeah we used to be 10 people in the company. We went down to only three people. So we didn't have anyone to actually be able to know how the app works. So we needed to get rid of it. So the emotions in this transaction was just like we succeeded and we also made a bonus money on top of that. Then on the real. I call it the real business because this is like selling our biggest app was almost 92% of all the revenues in one app. Then the emotion started to have an impact. Like why would like Attila was someone who contacted us like cold email us a few times before we actually. And we made a few calls before we actually started to trust him. Like why would you give a stranger your baby? Like to sell your baby. This is how we felt. I felt like that. So. And Bagan was well, we're not experienced to sell it but I was like, okay, but you know, we don't know this guy. And then we had, you know, this talk to make sure we were on the same page to go ahead with him. I think one of the main reason we went with him is because he only gets paid if he sells the business as a success fee.

Yeah, that was a great point from him. Like a great selling point of his.

And the exclusivity period that we needed to stick with him was four months. I think, I think it was at the beginning it was six months. We reduced it to four months. So we told ourselves, okay, if in four months he's not selling the business, let's try to sell it by herself either on Microacquire or maybe contact the same people. But if we would have sold to the same people, he would have introduced us. We had like a 12 months that we would still need to pay him if we actually success to sell the business. So yeah, I mean I think when we, when we started to sell the whole business, the real business, the emotions took place. And yeah, it was also. So we were talking about when we Decided to go ahead with the broker. But during the process, especially during the negotiation, because we got three different offers and then, you know, it was more stressful, like waiting for the comeback, waiting for the emails. Yeah, I mean, we could, we could expand on this topic, but yeah, as you can probably know, because your business is a. As well.

Yeah, well, that's awesome to hear. And I mean, I've, I've always been, you know, an advocate for, you know, there's, there's a, There's a time and a place for an M. A advisor. You know, if it's a transaction that truly is gonna, you know, change your life, it's gonna. Or maybe you just don't have time, or maybe you do want that expertise. A lot of people, again, don't know this, but we work with a lot of brokers, so I'm, I'm super happy you guys were able to find one that successfully helped you sell your business, because at the end of the day, that's all that really matters. So big congrats on that, I guess. Moving on to my next question is just, you know, there's, there's so many founders looking to. To sell their business. If you had to give, you know, just three tips on, you know, what to do, what not to do, what are, what are maybe some pieces of advice you give to other startup founders looking to sell.

Well, I can give you one, and that one is to start the business with that in mind.

Yeah.

Yeah, because it's gonna be easier at the end. I mean, at the end you're probably gonna sell it, so it's gonna be easier if you prepare for that since the beginning, either emotionally or like in papers and in whatever the business does. Thinking about selling it first is a good approach of doing it.

I like that.

I agree as well. Like, just a simple example. If you start with. On day one, with the mind to sell the business, we would have built, like, very differently, the whole business. For example, how do you manage your passwords? Like, how will you transfer your passwords? Are you using, like. Like just that it's simple. It might look stupid, but it's. It's really painful if you've not thought about it at first.

Yeah, I think just, you know, a lot of startups underestimate just the importance of just being prepared for an acquisition. Because sometimes it could come across at any time, you know, with buyer, with a broker, or without one, someone could reach out and it's a perfect fit. And just having all that material readily available can make all the difference. Especially in terms of showing the buyer that you're serious and that they can move quickly in terms of doing due diligence. So that's a good piece of advice. I definitely agree with that.

Add to that point. So we were talking about like thinking of selling the business on day one. So that also, I mean that's related to how transferable is the business when you're actually about to sell it to someone. Do you have people in the team that you could as two founders you could leave and the business could still run? I think you also. I've read your book. You had the same. The same process when you were not sure about telling the people when telling your people and stuff like that. Us, we were kind of lucky enough to only have one employee. So the mistake we've made was not to replace ourselves before. If we would redo that. I think Bogdan and I would just try to replace ourselves at least a year before we actually sell the business just to make it more easy to transfer and to also shorten the period that. Because we will stay with them until the end of 2023 with Stay Tuned. But it could have been shorter if we would have thought about it before. So to make the business transferable was kind of a lack in our case. Also everything that is related on the technical point of view to the documentation unit testing. Like if you're selling a software, how much automated tests do you have? This is also something that all but.

Circles backs do the same thing. It has to work without you and to work without you, you need all of this stuff. You need documentations, you need testing, you need the people.

Yeah, exactly.

I, I agree with that. I always say, you know, as. As CEO or you know, the founder of your startup, you kind of want to be the most useless person in the company depending on the scale. Like at Business Apps, my previous company, when I sold it, I. I kind of just my whole team was running everything. I during due diligence everything was just like ask that person, ask her. I don't know how that works anymore. Like, you know, it just. And I think if you, if you get. Yeah, go ahead.

No, I mean that's good. You. I think you did it the right. I think you read is the right way. When you do it the wrong way.

It sounds counterintuitive, but it's the right way.

It is very counterintuitive. But in, in. In. Two thoughts. You know, it makes a business easier to sell number one and then actually three points on this. So just on the topic of just Delegation and reducing just kind of, you know, you being a central point of failure in the business as CEO. Two, your business will grow faster if you're not involved, because you can't be involved in every single decision. There's just too many. So you need to trust your team. And then three, you'll keep your sanity because you don't have to, you know, mistakes are going to happen. You know, you can't be worried about everything. You got to have a team in place that can, you know, move the business along. And when it grows without you, that's when you really, really have something on your hand. So congrats to you guys for getting there. I guess, you know, moving on to the next question is, I got a feeling you guys are working on something new now. Do you guys have anything that you're already working on post acquisition?

Not yet, to be honest, we're still in. Last week we finished migrating everything to them, so we're still waiting for them to push the big red button to release the escrow files.

Nice.

We're still in this process and it should be on Friday. That is coming. Not sure when this podcast or this video will be shared, but it's probably gonna be thing of the past then. Yeah, for sure. We're gonna stay together. I think for me, I think I could share that. I almost fell in love with Bogdan the way he is.

Oh, gosh, we got some founder romance going on.

You could add like a background music on it. But anyway, for us, it was really important to think of what we do next. But we don't want to because we don't want to be too excited too fast. And, you know, because we're still working with stay tuned for X number of hours until next year. So we don't want. We know how we are. We don't want to get too excited too fast. So we kind of postpone every good ideas we have and we're like, no, that's better. That's a bad idea. But we know that we do something else. You know, as entrepreneurs, I think this is what we like to do. But no, we don't have. I don't have a cool answer for you. Like, we don't have project.

Right. Hopefully we'll call again after the cool answer.

Yeah, that's. No, that's. That's probably the best answer sometimes because it gives you time to think, you know? You know, one of the biggest decisions you can make as a startup founder is what problem do you go after, what market do you play in, what do you not want to do with your next startup because you have experience in terms of, do you want to manage people? Do you want to, you know, play to your strengths? Do you want to go into a different business model? You have so much time to think about it now.

Tinkering with buying a business and not starting from, from scratch. And that's why we're, we're actively looking on micro acquire as well.

I'm a little biased, but I, I recommend that route.

The risks are smaller. They're already a business, a product market fit. They have customers, they have like, they have a business. So why not buying it and scaling it? I think that that's one of the idea we have. What kind of business, we don't know, but the kind of business that would have weaknesses that we could fill in with our strength. So that's, I mean, whatever the industry.

One of the strengths we got was this one, to scale them fast. Like, because that app grew that fast, we learned how to handle and what many people want at the same time, like, how to handle this part of the business. So scaling a business would be something that we would like to do.

Yeah, yeah. See, that's, that's one of my favorite parts about Microacquire is, you know, you're able to sell a business and, you know, through building that business, you learn so much. You learn, you know, how to start a business, how to get those first customers, and then how to scale the business, which is arguably, they're both hard starting and scaling. But now you have an opportunity to potentially buy a business, then apply those, you know, lessons and avoid the mistakes that every founder just makes along the journey and potentially grow something even bigger than this last business. So I'm, I'm excited for you guys.

Well, we're probably. Well, thanks for that. First, we're probably gonna make not the same mistakes, but new ones.

Yeah, no, that's totally true. Yeah.

But the situation has changed for us. I mean, we started like we were poor, no capital, we didn't raise any money, we bootstrapped everything. So that's why we were relying on services just to found our main apps. And, and now, I mean, we have some sort of capital, so we can think, I think differently. And I think we should think differently, not like poor guys in Montreal and Bucharest just trying to start from. I think. Yeah. And I believe in 2023 we were going to have some great opportunities. I think the market might still go down. So. Yeah, I mean, we, Bogdan and I know we might have not sold at the right time in terms of valuation, if you compare with the year prior. But that also is related to what Bogdan was saying, to be prepared to sell on day one. And if we would have been prepared to sell on day one. Yeah, we have changed. But anyway, we're looking for opportunities like this and we're gonna keep an eye on Microacquire for sure.

Right on. Well, I'm definitely rooting for both of you and maybe I'll get you guys back on the podcast when you acquire something or. Or selling other business. Yeah, for. For those that maybe want to, like, get in contact with you to just learn more about your story. What's where, where can people find you.

Prepared for that. We just lost our emails and domains.

Okay, just say it. Just say your home address and they can come knock on your door.

Tell you my phone number, maybe. No, but seriously, I think I. We should still have a profile on LinkedIn. I think it's slash Derek Moran. D E R E K M O R N. But back then, probably the same. Or Facebook. But yeah, we were not really socially present last few years. I think my last post is like, I think I'm 23 years old in my picture. I'm 36.

Yeah, I'm the same. I'm like 20 years old in my picture.

So I'll. I'll be sure to put that in the show notes, but we'll try to find it. Yeah. Thanks so much for coming on. Thanks so much for coming on the podcast and congrats on. On both acquisitions. And I'm looking forward to. To seeing what you guys do next.

Yeah. Thanks for your time, Andrew.

Thank you. Thank you very much.

All right, guys, cheers. Happy holidays.

Bye. Bye.

See you.

Bye. Bye. Bye.