Startup Acquisition Stories with Colin Dougherty, Director of Marketing at Zenlytic

All right, I'm here with Colin, founder of CamSkins, who recently got acquired. Colin, how you doing today?

Pretty good. How about you?

Doing good. Like we were talking about earlier, it's not hot. Not cold over here in the bay, but it sounds like it's hot for you. For those that may not know you, do you want to get just a brief introduction of yourself?

Sure. I started CamSkins back in, say, 2020, when kind of COVID was happening and just the craziness of the world. That was my introduction to D2C, which was so crazy because it's just like kind of doing it at the scariest time, and I had no idea. And so I was kind of introduced to this incredible D2C E commerce community, and I've just fell in love with it ever since.

That's awesome. What made you start cam skins? I'm on the website now, and I wish I had a MacBook for one of the skins. Made you like, how'd you get the idea? How'd you get it? Started walking. Walk me through that.

Totally. So basically I was seeing competitors in this space, and I started as a photographer, so started as a freelance photographer, and I came across these things called camera skins. And I saw like one or two competitors in the space, and I was just like, you know, they're really cool designs. I'm not sure if I'm like a hundred percent sold on them. They don't really have a lot of loud designs or kind of crazy designs. And so I was living in Charleston at the time, and I. I found this local manufacturer who manufactures. They basically do vinyl wraps for your car. And I was like, hey, guys, would you possibly be able to reverse engineer this if I were to get you something? And we went through it and they gave me this perfect copy and I was like, that was the aha moment where I was like, these guys can do this. I think we. I think we have an opportunity here.

Yeah. This is awesome. The camera that I'm recording with, you have a skin for the can cameras? Yeah.

Which one?

It take a minute for me to look behind it. I'm not. Not the happiest with the podcast setup, but I might actually buy something on here. Yeah. So this is rad. So it's a E commerce brand where you can get skins for cameras, MacBook, even lenses. Rad drones. Yep. Okay, so how did you get your first customers? You. You get this idea. You find a manufacturer, you add a product. What happens after that? Ye.

So weirdly enough, this was back in peak Instagram era, where Instagram was pushing photos really hard still. And if you were a really exceptional photographer, they would still post your stuff a lot. And so we just started posting on Instagram every day, three or four times a day of these super high quality photos, because I was a photographer at the time and so I could take photos of the camera skins and make them super high quality. And we grew a ton of traction really quickly. And so it all was from Instagram before they shifted really aggressively to video, but it was all Instagram.

Nice. I like that. I always tell people when they're first starting out building a startup business, whatever it may be, focus on one marketing channel at a time, you know, because you can do ads, SEO, you know, social media, but just going all in on one channel, you'll be, you know, good at it, you'll be consistent. So that, that's awesome, man. And then, okay, so you, you got the business up and running, you got some customers, you got great products. I'm looking at your photos now. Beautiful photos. What made you decide to sell the business?

Yeah, so I basically had the business for 3 ish years. I tried a lot of things. And I think there's an old adage where it's like the team that gets you from zero to a hundred thousand is different from the team that gets you to a hundred thousand to a million. And then the team that gets you from a million to five is different from that team. And so I don't think I was ever. I don't think I am that super scale guy. And I didn't really want to go through either two options, which was, all right, do I want to raise money? Not really. I don't really want to go down that route. Or do I want to hire people? Not really. I don't really want to hire anybody. We basically ran Camscans with 10 contractors and freelancers. No one was W2'd it was just all contractors. And so there was this opportunity where it's like, okay, we could take this to the next level, but it would require hiring a ton of people or giving up a decent amount of equity.

Nice. I love that, that answer because a lot of, a lot of entrepreneurs, they, they'll build businesses and then not understand just what it takes to get to, you know, what you said. Let's say I usually think of it as like zero to one, zero to a million, a million to 10 million, 10 million to a hundred million. You know, those all require different, you know, skill sets. And it's so important, like, I Even say before starting a business, write down all the stuff that you don't like to do and that'll really be your guiding path. Like if you want to a big business, then you know, obviously managing people is going to be on that list. But if I don't like to manage people is on that list, you're going to optimize your business in the way you did with contractors, not having to manage a big team. So kudos to you on that. Okay, so you got your reason to sell. You know, you, you built it to a certain scale, awesome product, happy customers. Now you, you listed it on acquired.com so walk me through that journey. Like the, you know, first, why did you list on acquired.com what are the first week like? Tell me all of that.

Sure.

Yeah.

And then I'll also, I'll give you also my acquisition of how you acquired me too as a customer.

So I acquired you.

Yeah. So I was following you on Twitter and I'm all about Twitter and just like you constantly posting about it and just following your journey as a founder, I was like, go. This Acquire thing, these guys are just like building momentum, doing great stuff. And so I, I posted it on two different sites. I posted it on Flippa and I posted it on Acquire. And I was for sure. My, my guess was like, Flippa's going to crush it. Like it seems more DTC oriented. Acquire seems like very SaaS related and little like lo and behold, I got like 30 inbounds from Acquire and I got basically one from Flippa within like a two week period. And I was just like blown away that my, my hypothesis was absolutely wrong. And I honestly, I couldn't be more happy that it was wrong, but absolutely blown away by that.

That, that is, you know, I'm, I'm glad it worked out in, in that way. Yeah. So that's what 30 NDA sign from buyers.

That, so that's a feature that you guys have that I, I didn't realize and it was incredible. So it's like you take away this kind of like fear of sharing all kind of logistics and stuff and answering people's questions with that automatic NDA. I was a huge fan of that. So yeah, it was 30, 30 ish NDA signed within like 2 ish weeks or something like that. Yeah, it was wild.

Right on. Well, that's, that's what happens when you build a good business. And you listed on acquired.com that sounds like a commercial, but we'll, we'll roll with it. Okay, so you got you got 30 buyers. Now I'm just going to kind of walk through the journey. What do you do? You got all this interest people signing NDAs left and right. Yeah. This other platform that, you know, you're. I'm assuming you probably started focusing all your time on acquired.com just because selling a business takes time. You have to talk to people.

Yeah.

How. How did you vet buyers? How did you negotiate with buyer? How did you speak with them? And how did you finally arrive? This is, like, the most loaded question ever, so maybe we can drag it. How did you, you know, vet buyers initially and then how did it lead to the final buyer that actually acquired Canton?

Yeah. So there was. I used the chat feature inside of Acquire, and I was basically talking to all of them. And I would get the email updates because I think you. I think I signed up for, like, email updates on Chat for Acquire. And so I would just get these email updates to my phone, and I would be like, 11:45, and people would be like, hey, could you give me the P and L financials for the last four years? And I would just be like, all right, sorry. And I just run away from my girlfriend and just hammer out into the computer and send them a quick P and L for the last four years. But it was just constantly keeping those conversations flowing and then basically whittling away and fielding, like, verbal offers from people and then slowly starting to go from, like, okay, there's 30 people that are pretty interested. Okay, like 20 to 15 people want to take maybe more next steps to have some more serious conversations. Okay. Like 10 people maybe want to put verbal offers. And then you start to, like, kind of get down to, okay, who's the right person for me. And I also had a couple kind of requirements on my side where I was fielding phone calls. And one of the requirements that I talked to all these guys with was, if you buy camskins, the manufacturer stays the same. I use a US Manufacturer. These guys took a bet on me when I had basically no money in 2020, and I basically gave them my life savings and was like, please bet on me. I know I have no proven track record. I promise I'll do something with it. So if you buy cam skins, you have to use these guys, because I owe that to these guys for sure.

I love that. That's so awesome. Just staying loyal to the people that help get you where you are today. I like that. And then another thing that you just mentioned, though, that I want to bring up, that is extremely important. Don't necessarily realize when you're selling a business, guess what, you gotta sell your business. And so just like in sales, when someone requests information, get back to them as soon as possible. Because when, when I've seen acquisitions not fall through, we'll go and, you know, give advice to the founder kind of look. And nine times out of 10, we'll see chat logs not responded to, we'll see, you know, questions answered three days later. What that does is it signals to a buyer that you may not necessarily be serious. And it's also kind of a view into what it's going to be working like with you. So like, great job responding like really fast, even though I'm like 9:30 at night. Because that really does show the buyer, if they buy this company, you're going to be there, you're going to be responsive, you're going to be easy to work with. And all of that de risk acquisition, like that's your job as you know, the owner of the business when you're selling, is to sell the business and to de risk the acquisition for the buyer. So great, great job on that. So, all right, so you found them, you found the buyer. This person is, he's agreed to your terms. You're, I assume, getting along great. Now you move into the funnest part ever, aside from going to Disneyland. Due diligence. Oh yeah, yeah, walk me through that in terms of, you know, it's ecommerce business. How did that process go and what'd you learn from it?

Yeah, I was basically keeping two people on speed dial at all times, which was my accountant and my friend who is a lawyer. And I was basically just be like, if they needed anything, I would respond immediately with due diligence. And then if we kind of had some new terms that we were working with or potentially trying to figure out a different way to shape some stuff, I would always run that by my friend who's a corporate lawyer, and I'd be like, hey, what do you think about this? Does this seem right? Does this seem like something that I should go with? Or is this totally. I should ignore this? So it's basically this kind of like your two weeks of hold your breath period, where the buyer is essentially trying to poke holes in all of your evaluation for your company and you are providing as much data and backing that up as much as physically possible. And so I felt that my accountant and my lawyer would back me up and hopefully this would also back up the business itself. So it was a, it was definitely more stressful than, than I would have thought. But I'm, I'm glad we got through it.

Nice one. One tip. I always get to founders that when you're in due diligence is, you know, there's multiple parts of your business, not necessarily be serious. And it's also kind of a view into what it's going to be working like with you. So like, great job responding like really fast even though I'm like 9:30 at night, because that really does show the buyer, if they buy this company, you're going to be there, you're going to be responsive, you're going to be easy to work with and all of that De Risk acquisition, like that's your job as you know, the owner of the business when you're selling is to sell the business and the de Risk acquisition for the buyer. So great, great job on that. So all right, so you found them, you found the buyer. This person is, he's agreed to your terms. You're, I assume, getting along great. Now you move into the funnest part ever, aside from going to Disneyland. Due diligence. Oh yeah, yeah, walk me through that. In terms of, you know, it's E commerce business. How did that process go and what did you learn from it?

Yeah, my, I was basically keeping two people on speed dial at all times, which was my accountant and my friend who is a lawyer. And I was basically just be like if they needed anything, I would respond immediately with due diligence. And then if we kind of had some new terms that we were working with or potentially trying to figure out a different way to shape some stuff, I would always run that by my friend who's a corporate lawyer. And I'd be like, hey, what do you think about this? Does this seem right? Does this seem like something that I should go with or is this totally. I should ignore this? So it's basically this kind of like your two weeks of hold your breath period where the buyer is essentially trying to poke holes in all of your evaluation for your company and you are providing as much data and backing that up as much as physically possible. And so I felt that my accountant and my lawyer would back me up and hopefully this would also back up the business itself. So it was definitely more stressful than I would have thought. But I'm glad we got through it.

Nice. One tip I always give to founders that when in due diligence is, you know, there's multiple parts of your business, you didn't have this scenario happen. But a lot of times when you go and do due diligence a buyer will always find something they don't like. Just something. It could be big, it could be small, it could be material where the deal falls apart. But one strategy is to, you know, again, your job at this point now is to really make it easy for the buyer to understand your business end to end, and then also verify everything that you provide presented as as true. So one example would be while the buyer has a list of due diligence questions, you start sharing more about the business. How does marketing work? And it can be a simple recorded video. How does you know, why do people buy your products? How does support work? If it's a software business, you know, how does the product work from a high level? Have you raised prices? Just other things about the business to get them. Because you're still selling the business after you sell an after you sign an loi. And if you do that, sometimes if they find something maybe kind of small, you just shared with them a bunch of other stuff to get excited about, growth opportunities, etc. And that can keep the deal going. But it sounds like you had a pretty smooth due diligence process, so congrats on that, man. And then so it comes time to, you know, why are the funds. Did you use escrow service? How did that. How did you kind of end all this?

Yeah, so I think we use an escrow service. I forget which one, but we just use an escrow service and decide a date. And it's weird because, like, I don't know, you. You assume when you're selling a business that, like, you don't really know what's going to happen. And then you realize that, like, oh, this is just all going to get wired to my bank account. And then it just kind of appears in your bank account. And so I'm like, looking at my Chase app and I'm like, oh, wow, this is real now.

Okay.

It's kind of a weird mom where you're just like, all right, this is cool. This is also super strange. Like, I. I made this thing and now it's, like, worth this money and it's on my phone. I don't know. It was kind of a surreal moment.

But yeah, yeah, I can relate. When I. When I sold my first business, when the wire came in, I was. I actually wasn't excited. I was super, like, nervous and scared. Yeah, it was such a weird feeling because I got the typical, like the. I sold to a private equity firm and he texted me, like, hey, check your bank account. I remember he sent some, like, banker terms like, Cut the cigar and puff it or something. Something like that. I don't know, like, smoke a cigar. And I checked my bank account. I'm like, whoa. Like, is this illegal? Like, did I do anything wrong here? Like, it's not what I expected. And then I actually didn't, like, sleep very well that night. It's one of those moments, like, you just never forget. I'm glad he got to experience that.

And then I was convinced that, like, Chase, my. My bank that I use was gonna, like, market as fraud. And so I was like, do I need to talk to Chase in person and, like, tell them before this happens and be like, hey, like, just to let you know, I'm gonna, like, get this transfer. Like, please don't mark this as fraud because, like, this is real. So I was in this weird limbo where I was like, oh, please go through. Like, oh, my gosh.

Yeah, the waiting period is terrible. I had what's called a false start. Again, just acquisition slang. Maybe. Maybe acquire.com will change it. But that's when you have a closing date, but you miss it. And so you're just waiting, waiting, waiting, waiting. And then wires can only go out past, I don't know, 1pm Eastern. And so, you know, 1pm Comes and nothing happens, and you're just like. And then. And then, you know, it's some person that wasn't able to get their document in and wasn't able to get the approval. So that feeling also sucks, too. So glad. Glad it all landed in your bank account where it belongs. So now I got every person I talked to who sold a business is working on something else. What do you. What are you up to now?

Yeah, so I just. I just jumped on as the director of marketing for a SaaS startup called Zen Lytic. And it's pretty wild because I'm one of the first 10 employees. And so you get that, like. You get that really core feeling of, like, all right, we're going to be at the ground floor of this. And I basically have the opportunity to shape how we're going with marketing and the direction we're going to take, which is kind of the thing that fires me the most up is like, at the end of the day, Camskins was just all my marketing ideas, and I just had a great manufacturer that somehow supported me and bet on me. And now it seems like this startup that I just joined is essentially doing the same thing, where they're just like, hey, man, what are your marketing ideas? How are we going to go forward? And that's the stuff that just fires me up the most.

That's awesome. And then you have a whole business that you built ansell to back it up in terms of experience. That's awesome, man. And I guess, you know, final question B. You know, lots of people are trying to sell their businesses right now. Lots of people don't know whether getting themselves into what are maybe like three tips you give to another entrepreneur that was specifically looking to, you know, list on what would you. Yeah, three, five pointing piece of advice. What would it be?

Definitely, I would say top three is if you can know your numbers like as best as you physically can and just get all those done out of the way. And I'm talking like all your PNLs for the last five years and just make sure you know all that stuff. And like even any someone like, like some anomaly months too. So you're just like, you can explain those. You'd be like, oh, what was happening with this weird month? Like, oh, actually we did XYZ and then I think painting the picture too for like I was basically upfront about it where I was like, I've taken cam scans as far as I physically could. Here's the other opportunities in which I think camscans can expand. And then I listed all of those out and I gave them basically the full playbook of how I would expand it if I had more opportunity to do it. And I think just the third thing is talk to some people that you really trust and have some really good phone calls. There were some moments during this process where I was doubting myself and I was just doubting basically everything. I think it's pretty normal to do during that process. But I have some really good friends in the industry like that are in various stages of all of this. Some have sold their businesses and some are operating them. And I would just call them and they would basically just be a. An opportunity for me to just like complain or give me some advice on this type of stuff. And that was more than helpful. I mean that's, that's huge.

That's awesome. I love all that advice specifically in the beginning, like preparation, like the amount of startups that sell on acquire.com that prepare in advance compared to no P and L, no presentations, no information about the business. Because the first question a buyer is going to ask you is usually like, can I see your financials? Can I? You know, so having all that up front gives a good first impression, shows you're serious about selling the business and again just increases your chances of getting Acquired by a magnitude of an amount. I put it at like 500 in terms of. Because it shows buyers that you're serious. And buyers are looking at a lot of businesses. So I love that. And then two. Yeah. Have growth opportunities. Like, no one knows. The buyer is not going to know how to grow the business in the same ways that you are, because you've been living the business. You've built the business. There's obviously things that even, you know, I want to do with my business that I haven't done yet. So just being able to share those with buyers, I think is huge. And then. Yeah, I mean, always having just someone in your corner. Shameless plug. We got. If you reach out to acquire, we got a team of M and A advisors, so we can review lies. We can do all that sort of stuff. Just. Just to have someone in your corners is huge. And like you. When I sold my first business, I had a friend in investment banking, and I would just call him with the funniest questions. I'd be like, should. Should I send this email? And he'd be like, no, go to bed. It was just as simple as.

It's that.

Yeah, yeah, he. It was all pro bono, and it just was just like, you're fine. Calm down. Almost like a therapist, you know, that can go a long ways because that's. Because emotions and tensions can be high when it's a meaningful acquisition.

Yeah. I was like, hey, man, I remember I was asking one of my friends, I was like, dude, could you please read this? I know I'm not seeing this with straight eyes. Could you please read this contract? And he's like, dude, you're fine. This is pretty normal. And I'm like, okay, okay, okay, this sounds good. I'll respond to it.

Yeah. So if you got an LOI and you're listening to this as a seller or a business owner on acquire.com, we'll look at them, and we've seen thousands, so we can give feedback really quickly. But, Colin, this has been great. Anything else you want to add before we end this?

No. Make sure that you know when to sell. I knew when I. When I wanted to sell cam skins, when I lost the passion for it. And if you're gonna do something, you gotta be, like, fully committed to it. And once I was out, I was like, I'm not that guy. I can't just, like, ride this halfway and then just try to do something else. If you're thinking about selling and you're feeling like. Like my heart isn't really in this anymore. You should probably sell and then move on to something else that you can give a hundred percent. And that's basically what I'm doing now. It's like I'm fully bought in. I'm all in now.

I love that. And sounds like the startup size that you're at too is the funnest. So please, please, please enjoy it. And then what you just said, I couldn't agree with more. Just because buyers will know, like if. Because again, buyers are going to spend time looking at your p L and they're going to spend time looking at your materials. There's any scent of just you're not serious about selling. You're on the fence on their end. They're thinking, well, I don't want to spend all this time if you're just not going to sell in the end. So really, you know, being, you know, you've come to the conclusion that you want to sell again increases your. Your chances of being acquired quite a bit. So, Colin, well done. I'm impressed. And this is. This is a fun story I'm running for you, man. If people want to find you online, where can they find you?

I guess Twitter is the number one these days. Yeah, just Twitter. I'm Colin D. So I'll be there.

We'll put that in the show notes. We'll call on. Appreciate you coming on, man. I'm rooting for you.

Thank you. I appreciate it, Andrew, so much.

All right, cheers.