Startup Acquisition Stories with Ihor Stefurak, Co-founder of Mentalwalk

All right, I'm here with Igor, who has actually built multiple businesses and sold them on acquire.com Igor, how you doing today?

I'm doing fine. Thank you so much. Thank you so much for having me on the podcast.

Yeah, my pleasure. So for those that may not know your background, do you want to give a quick introduction of yourself?

Yeah, sure. So I was working for a Ukrainian startup accelerator for, like, over six years, and that. That's where I got introduced to the startup movement in general. And then I built my first project in 2015 working there, and it was a job board for startups to hire their first employees here in Ukraine. And I sold it in 2019, and since 2017, I've been working on my own projects full time. So most of them I start as a team of one, but in cases where I need, like, some advanced development, I reach out to friends who code and we do it together. And, yeah, so because of so many ideas, it's too boring for me to work on one business. So that's maybe why I launched over 40 experiments and sold 10 of them, and five of them I have in my portfolio right now. And, yeah, so that's my approach I developed during, like, over the years.

Nice, I love that. And then, so in terms of the businesses that you sold on acquired account, which one was your favorite? Maybe we can focus on that one.

Yeah, I think the last one is my favorite one because it was the fastest exit I have ever done, only like three weeks from launch to exit. So that's my favorite one.

And what was the name of that business by Grant?

It was like tape, a type slash AI, a Chrome extension with a slash AI assistant in any text box you can write or the Internet.

Nice. I remember that one. You wrote a Twitter thread. I think it got like 3 million views on it or something like that.

Yeah, yeah, yeah, it was. It was epic thread. How I built and sold the project within three weeks. And, yeah, got really huge attention to it.

Yeah, that was cool. Let's talk about that one then. Okay, so what made you build that and what problem did it solve? Let's start there.

Yeah, sure. So I launched this project actually, as a fun experiment just to figure out how good ChatGPT is at code writing, and the results from the first few prompts were great. So I spent the next 10 hours improving the output, and at the end of the day, I was able to actually record a live demo video with a Chrome extension created in collaboration with ChatGPT as my CTO. And I wrote the. So that's that's it.

Is that something that I, I couldn't agree more with in terms of like preparation because it's usually the first question buyers are going to ask is do you have a P and L? Do you have any additional information? They might have some specific questions generally around the health of the business, but the more you can provide about how the business runs, the opportunity, you know, financials, it just saves everybody so much time. Did you maybe with your first acquisition, did you go in just as prepared and then realize.

Of course, no, of course, no, I learned this along the way.

Yeah. Okay, that's, that's, that's maybe what I was, I was guessing because it does. Yeah. I think a lot of sellers, we see them list and we always recommend, you know, preparation is, is so, so, so key because the first impression you have a buy, get back. And so if you're able to, you know, just take a little bit of time and prepare the necessary, you know, financial statement, overview of the business and even just a plan of transferring assets like so buyer can. Because your job is to help a buyer understand your business as easy as possible. And so the easier you make it, the more interested buyers you're going to have.

So yeah, and, and, and this applies to anything you would like to sell online, like your own project or, or maybe like some shoes on ebay. You also need to write good listing and also need to include great photos. That's how you sell.

Yeah, I would agree with that. A lot of startups that I see on acquire.com so when you, when you list, I'm not sure if you notice this, but we'll, we'll kind of polish up your listing a little bit and we'll see startups with web pages where I'll even read them and I'm like, I have no idea what your product does like. And so we'll kind of, you know, we'll. I always recommend just stating who is it for, what problem does it solve and why is that important? So I agree with you entirely. So let's get back to. So you listed on acquirer, you got 50 NDAs signed. That's incredible. How did you narrow it down to the end buyer that you ended up selling this business to?

So I look for a few things when selling a project. Firstly, I want process to be quick and a good sign is when the buyer has questions prepared and ready to ask them so we can address them right away. And another positive sign to me is when a buyer asks for my help and willing to pay for it like I usually do some small things for free. I mean some improvements to the product because of this. But yeah, that's essential. And I want to know if the buyer plans to keep the project going and make it grow. So because most people, people think they can just buy something and make money without going any work and, and, and try. I try to avoid them in, in.

General, yeah, that's, that's, that's another really good tip. I mean just the experience of the buyer can really make the life or I guess you can avoid a lot of headaches if you sell to an experienced buyer that has a plan, ideally has some acquisition experience or some technical experience or some experience in the space that you're operating in, whether that's e Commerce or SaaS. So that's another good tip. Okay, so you found the buyer. You guys agree to terms. How did due diligence go? I imagine it was probably pretty smooth because you had prepared in advance. You had a asset transfer kind of outline, plain outline. Tell me about that process. Once you sign, you know, an LOI what happened next?

So during the typical due diligence, I show proof of earnings and answer the set of questions. And I'm always proactive at any stage and I tend to demonstrate and explain more than they ask for. And sometimes buyers ask for a call so I can walk them through the cold product great process and actual usage of the product. And I think that the most effective way to investigate because buyers can record the session and watched later. And I think acquirer could consider adding this as part of the listing perhaps by recording a video that covers these topics and actually shows how the product works on the inside.

That's, that is. Yeah, that's something that we actually haven't looking at in terms of like one tip for maybe people looking to sell their business. I love your thoughts on this too. Is just like a video introduction of yourself. Like a ice break your video. That's like.

So that's, that's it.

Is that something that I, I couldn't agree more with in terms of like preparation because it's usually the first question buyers are going to ask is do you have a P L? Do you have any additional information? They might have some specific questions generally around the health of the business. But the you can provide information about how the business runs, the opportunity, you know, financials. It just saves everybody so much time. Did you maybe with your first acquisition did you go in just as prepared and then realize.

Of course, no, of course, no. I learned this along the way.

Yeah, okay. That's, that's, that's maybe what I was, I was guessing because it does. Yeah. I think a lot of sellers, we see them list and we always recommend, you know, preparation is, is so, so, so key because the first you have a buyer is you can't get back. And so if you're able to, you know, just take a little bit of time and prepare the necessary, you know, a financial statement, overview of the business and even just a plan of transferring assets like so a buyer can. Because your job is to help a buyer understand your business as easy as possible. And so the easier you make it, the more interested buyers you're going to have. So.

Yeah, and, and, and this applies to anything you would like to sell online, like your own project or be like some shoes on ebay. You also need to write good listing and also need to include great photos. That's how you sell.

Yeah, I would agree with that. A lot of startups that I see on acquire.com so when you, when you list, I'm not sure if you notice this, but we'll, we'll kind of polish up your listing a little bit and we'll see startups with web pages where I'll even read them and I'm like, I have no idea what your product does like. And so we'll kind of, you know. Well, I always recommend just stating who is it for, what problems it solved and why is that important. So I agree with you entirely. So let's get back to. So you listed on acquirer, you got 50 NDAs signed.

That's incredible.

How did you narrow it down to the end buyer that you ended up selling this business to?

So I look for a few things when selling a project. Firstly, I want the process to be quick. And a good sign is when the buyer has questions prepared and ready to ask them so we can address them right away. And another positive sign to me is when a buyer asks for my help and willing to pay for it. Like I usually do some small things for free. I mean some improvements to the product because of this. But yeah, that's, that's essential. And I want to know if the buyer plans to keep the project going and make it grow. So because most people, people think they can just buy something and make money without going any work and I try to avoid them in general.

Yeah, that's another really good tip. I mean just the experience of the buyer can really make the life. Or I guess you could avoid a lot of headaches if you sell to an experienced buyer that has a Plan ideally has some acquisition experience or some technical experience or some experience in the space that you're operating in, whether that's e Commerce or SaaS. So that's, that's another good tip. Okay, so you found, you found the buyer. You guys agree to terms. How did, how did due diligence go? I imagine it was probably pretty smooth because you had prepared in advance. You had a asset transfer, you know, kind of outline the plan outline. Tell me about that process. Once you sign, you know, an LOI what happened next?

So during the typical due diligence, I show proof of earnings and answer the set of questions. And I'm always proactive at any stage and I tend to demonstrate and explain more than they ask for. And sometimes buyers ask for a call so I can walk them through the cold product, great process and actual usage of the product. And I think that the most effective way to investigate because buyers can record the session and watched later. And I think acquire could consider adding this as part of the listing, perhaps by recording a video that covers these topics and actually shows how the product works on the end site.

That's, that is, yeah, that's something that we actually have been looking at in terms of like one tip for maybe people looking to sell their business. I love your thoughts on this too. Is just like a video introduction of yourself. Like a ice break, your video that's like, hey, I'm Andrew. This is my product. This is what it does, the problem it solves. This is the current revenue. This is generally what I'm looking to sell for. I look forward to speaking with you. Something like that. Very brief, you know, kind of gives an outline here. You can find my P. L. We've seen that work. Really, really in terms of, you know, getting buyers interested and just making it again, easier for them to wrap their head around everything. But that's, that's great feedback. What's your thoughts on that in terms of like an intro video or anything?

That's a great idea. Yeah, you should do this. Definitely.

Yeah, we've seen it be, you know, quite helpful. And again, it really just. It's like that icebreaker. It's like, who are you? What is the business? What documents should you focus on? What do they mean?

Yeah, I love this. I love this. Like maybe three to five minutes would be great to have.

Yeah, well, we'll get that feature. We've been, we've had a request for it for a while, but anyway, so you, so you, you went through due diligence. I love how, you know, you Recorded the sessions just so, you know, the buyer can go. And there's always just something like that. Maybe you don't remember it or, you know, you want to go back and reference it. So I was. That was smart to record them. And then the buyer has, even after the deal is done and everything has been closed. So any bumps around this acquisition, any headaches, any things that you learned? I know this was your third or fourth acquisition, but anything that came as a surprise or you issued it differently, or was this one just kind of smooth from start to finish?

Oh, it was. Everything was fine for me, except the escrow part, because your escrow partner doesn't. Doesn't directly work with Ukraine and they work with Ukrainians, but a bank account should be located outside, so that's the only thing. So I offered the buyer an alternative escrow partner, but we agreed on a plan where I transferred domain for a small part of acquisition price and everything else after the next payment. And it all went well for both of us in this case.

That's good. Yeah. So I always recommend using escrow service. And we do have an upgrade coming soon. This podcast might be out by then, but I think, you know, that's where goodwill with the buyer and just having a buyer that you can trust. I don't ever recommend not using an escrow service, but if you're in a situation where maybe the acquisition is on the smaller end and you trust the buyer and you do milestones where you know, like, you did like a domain, here's the first payment, second payment, third payment. So it just reduces the risk that, you know, you sell your business without any sort of protection or anything like. Like that.

And in terms of transferring, the. The project did not have any servers to transfer, so we transferred the domain, A stripe account, a published project on Chrome Web Store, a website, a source code and a list of leads, some marketing assets, and that. That's it. So we did it. We did this like, for, like. And we are done.

Nice. Well, that's. That's, you know, potentially, you know, record. Record time, I guess. You know, maybe one of my last questions would be, you know, given that you've gone through the acquisition process, you know, a few times now, if you had to just give any advice to other entrepreneurs or even buyers, what's like, maybe the three top things that come to mind to make sure you have a successful acquisition.

Okay, yeah, sure, sure. So for me, first is gather all the information available to you and use it. Create a comprehensive presentation. The next one maybe is potential buyers Prioritize the easy and speed with which they can restart and grow the project. So often preferring projects with a viable business model over those that generate significant revenue. So, so minimize expenses as much as possible and optimize them prior for to. To listing the project for sale. And also avoid immediately rejecting an offer if it falls short of your expectation. Take the time to listen to. To reasoning and attempt to negotiate. So and maybe final one is like because I'm, I'm working like on another high level. So a lot of people came up to me on Twitter and asked for. For. For. For tips and I told them like don't waste your time selling a project that doesn't have any traction because you need to close it and move on. Build something else. Just, just it.

I like that. I like your advice on the loi specifically because that's a negotiation piece. You know, someone's giving you an offer, you. You are fully allowed to counter offer if or whatever maybe isn't there. So that's a good tip. So Igor, what are you. What are you working on now? I got a feeling you're probably working on something new already.

Yeah. Yeah. I have a few, a few projects going on like in my portfolio by but my upcoming project is named Mental Walk. It's like a tool designed to help you learn how to think. That's my passion. Like learn how to think and improve this skill. And years ago I learned about mental models and how. How they influence the perception of the world and I even developed my own decision making framework. It is still like a work in progress but some of my friends are already using it and I found it challenging to incorporate this mental models into everyday life. Despite completing courses reading books, many people struggle to apply learned principles to real world situations. So this is difficult to me and to others. So with Mental Walk my goal is to introduce people to this concept.

If people want to get a. Get a hold of you to learn more about what you're working on next or just chat with you. Where can they find you online?

Yeah. So more threats coming soon. So I write about my experience on Twitter so follow me ihorstaforak so. So that's, that's it. That's the best place to. To check what I do and also check out mentalwalk.com right on.

Well, I'll put those in the show notes so people can check them out. But Igor, congrats on all the success.

Marin, for you man. Thank you. Andrew. Thank you. Thank you so much.

All right, cheers.

Cheer.