Startup Acquisition Stories With Luke Sheppard, Founder of Revive Ratings

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All right. I'm here with Luke Shepard, who recently got acquired for half a million bucks at age 23. Luke, how are you doing today?

I'm doing great. How about you?

Doing good. Doing good again, huge, huge, huge congrats on the acquisition. It was a fun one day to work on with you. But for those that may not know you, do you want to give a brief introduction of yourself?

Yeah. So my name is Luke Shepard. I just graduated from college. I went to byu. While I was there, I started a company called Revive Ratings. Essentially, what we did is we just helped small businesses to get more reviews on Google. And, yeah, so it's a wild ride, you know, getting that all the way to close, but super fun.

What made you start the business in terms of. Did you see, like, a market opportunity? Like, I'm. I'm just amazed that you're able to do this at age 23.

Yeah, I mean, so I was. I think I was. I was 21 when I started it. Right. And so what had happened is I had started working for a SaaS business, and it was really cool. They worked with local businesses doing some sort of SEO. But I just felt like there was a couple of things that if they started doing this, if they started doing that, if they started targeting this niche, you know, they could really just explode with growth. And, you know, as soon as I started thinking those things, I'm like, well, why can't I go do that on my own? So I left. You know, we built an entirely new product, but it still focuses on SEO. Right. That's the purpose of those reviews. But we targeted insurance agents and just really just doubled down on that niche.

I love that. I love, especially my. My previous. I may have told you this, but we sold to small businesses at my first company. And, yeah, we had a feature within our mobile apps that would help drive more Google reviews if you type in. Because, as you know, if you type in, like, insurance agent in, I don't know, San Mateo or whatever city you're in, you'll rank at the top. So it's super, super important. Tell me about how you got your first customers, because I can't. I. I know selling to insurance people isn't, you know, the most straightforward thing. How do you figure that out?

I mean, you know, it is. And it isn't like, now that I'm out of the industry, I feel okay saying this. Insurance agencies were the easiest clientele to start with because I started without, like, knowledge of, like, Apollo or Seamless or Zoom info. So I don't know how to find people's names online. So if you look it up, just look up insurance agencies near me, you're going to see it's like Allstate Insurance. Todd Smith, Allstate Insurance. You know, Sam Johnson, Allstate Insurance. Luke Shepard. So it says the name of the decision maker right there. And so that's why I chose insurance agencies, because I knew exactly who I needed to talk to. And there was one gatekeeper on the way.

Was your. To get the first customer, was it like a direct sales approach? Like you just cold call them?

Yeah, that was all. That was our first 200 customers. Yeah.

So all cold called all by you.

I mean, mostly by me. I. We started hiring cold callers especially. Time went on, but I probably did the first 30 to 40, like fully self sourced. And then we brought in lead setters and I would close their deals. And then eventually we brought in a few closers to up close.

Good for you, man. I mean, learning sales just for any entrepreneur is so big. Everything you do when you're building a company, sales, I love that. Tell me about. Okay, so you build the business, it's starting to take off. Was there like a moment where you kind of sat back and you're like, like, I. I really got something on my hands. Like customers are signing up faster than you thought. Do you?

Yeah, I mean, I would say like every month I had a day like that. And then every month there was also a day where I was like, well, I'm going to lose all my money on this. It's just super up and down.

And that's the life of an entrepreneur where, you know, on Monday you're like, you know, I'm going to be a billionaire. And then Tuesday you're like, I'm going to go broke.

Yeah. I was telling my wife yesterday that we sold revive at like exactly, like I would say, the medium of our expectations. Right. On one end of the spectrum, it's like, I'm never going to have to work again when I sell this, you know, because it was always because I started in college and it was like, I want to sell it in two years. Right. Get a first acquisition under my belt. And so I was like, I. I was like, I really want to get like 5 million bucks off of it. But some days I'd be like, no, I'm getting nothing out of it. And it's funny because it was like just where we sold it. I'm like, that's like the middle of our expectations, you know, I mean, you.

Did Absolutely fantastic with this outcome. And I love how you started in college because that's when I started too, man. Like, like I was telling you previously, it's the best time to start a business because you don't have, you know, a lot of responsibilities. You don't necessarily have, like, a mortgage yet or anything like that. And you can. You can really go for it, and you did, and you accomplished it so well.

Then the other cool thing about college is, like, kind of like the secret is you just. No one sees you as a threat, right? So I would actually, like, spend, like, probably like 30 minutes a week just messaging competitors on LinkedIn their CEOs and stuff. And like, hey, you know, I'm in college. I started a business. We kind of compete with you. I've only got 100 customers, though. Do you mind if I took you out to lunch or something? And I mean, no joke when I tell you 95% of them said yes.

That is great advice for any young entrepreneur list. And it's true. I remember that for myself as well, where, yeah, people are more willing to just give you, you know, more experienced entrepreneurs are willing to just mentor you because you're just starting your journey. And it's just, you know, so few start the path at a young age, especially, you know, as successfully as you. So that's. That's an interesting tip. I never did that. I never reached out to, like, GoDaddy, and I was like, hey, can I talk to your CEO?

Yeah. No, I was always shocked. It was. It was really cool. I liked it a lot.

Nice. Well, let's move into the acquisition process. So I was. I was along for this journey with you, and it had some. Some interesting twists and turn. But let me ask you this. Okay. So the wire hits your bank account. Half a million bucks. What did that feel like, man?

Oh, it's so awesome. I mean, like, you really just can't. I mean, it's. It's so cool just knowing, like, you know, I could go. Go off and just go live in, like, some third world country and do nothing for the next three years, and I could, you know, just not even worry about money for a second, you know, Obviously that's not what I'm gonna do. I'm putting into something new. But it's. I mean, it was. It was awesome. Just kind of putting a dollar value to the work that I'd done, you know?

You cash in your chips, dude. I always say, you know, you want to be like Tom for MySpace and cash in the chips when you can Tell me about. Okay, so let's, let's take it back to the top though. So revive ratings. It's going good, it's growing. There's a. You got a lot of happy customers. Well, walk me through. You know, when you first listed on acquire.com, you know, what was your expectations and what was like the first two weeks like.

Yeah, so I had, like, I have a good friend and a mentor and he had told me about acquire.com when I told him I was getting ready to sell. And so he gave me some advice which was like, make sure your business is profitable. You know, because I feel like we're always told when you start a SaaS business, like, oh, you're going to be valued off of profit, off of revenue. Right. You're going to get three to five times whatever your revenue is. And like just, I mean, yeah, that, that's true in some cases and may in a different economy. But like he was, he just told me like, now you're going to be valued off of profitability and just the ability for the business to run without you. And so, you know, kind of hearing that, I was like, okay, let's cut back on as many expenses as we can. Maybe we slow our outbound down just a little bit to make sure that we're running just at the most efficient rate. And so that was probably like two months before the acquisition or two months before we posted it on acquire. When we posted it, we got some pretty immediate interest and there was, you know, we had our first buyer and you know, things fell through with him after about a month of negotiating. That was a little bit discouraging. And then we did find our buyer after that.

So that I love, I love the, the pre listing preparation. Because you're right. Yeah, like you're gonna be. Because there's, there's financial buyers and strategic buyers. Strategic buyers. I always say, you know, maybe you have like a 5% chance with a strategic buyer and they'll value your business entirely different from the majority of buyers, which are definitely going to be looking at your profitability. So you were, you got some great advice right off the start. Tell me about this. Maybe a shameless plug question, but how did acquire.com and the team help you? Like, what did, what did we do?

I mean, you guys were so awesome. Like it was, I mean, just like walking us through with the buyers. It felt like every time that I made a wrong decision, it was made wrong. But you guys have told me numerous times, luke, don't do that. Don't do that I'm like, I still think I'm gonna do it. But I mean, you were there along the way. Kai was incredible. Like, just in making sure that we were talking with vetted buyers, making sure that we were getting a good deal. Just like, I don't know. I. I love when you called me for the first time and when I was talking about the offer, I'm like, I don't know, because it's a little bit lower than our listing price. And you asked. You're like, how old are you? I'm like 23. And you said, take the money and run. You know, I remember that. I just thought that was really cool, that it was like, you know, just having the brokers along with us. You guys really just helped tailor the buying experience to whatever would be best for. For me.

So tell me about. I appreciate that. And I definitely enj our conversations during the acquisitions because there was a few times that we had to call you and be like, I wouldn't recommend doing that. But, you know, it all worked out. Do you want to walk through? Okay, so, you know, you. You were super prepared on acquired.com, you spoke to a lot of buyers. You have a great business. How did you land on the person, the buyer, the group that eventually acquired your business? What made them stand out?

They. They went to the same church as me, so it's like we're both members of like, the LDS based. And so we got on a call and just like, I feel like that instantly built like a little bit of rapport and trust. And so our deal looked a little bit different than it would in most case scenarios. But I'm like, ah, these guys, we've probably got pretty similar moral standards, so let's just go for it.

Yeah, Trust in acquisitions is huge, you know.

Yeah.

Just being able to get along with the buyers and yeah, having that goodwill built. There's a. There's a saying I say repeated. I probably even told you this, but you can't do a good deal with a bad person. Like, if you just can't trust your buyer. And that goes for the buyer too. If they feel like they just can't trust the seller, due diligence is going to be like pulling teeth, you know, it's going to be such a headache for everyone involved.

Yeah, that. That was kind of sorry. I mean, not to say that we couldn't trust our first potential buyer, but it was. We just didn't do like a great job of getting the buyer because we'd gotten emails from you and From. Or I think just from Kai at that point. And, like, like, you know, how hard can it be, right? All that we got to do is just reply to the messages. I don't think we need someone walking us through every step. And I don't know, if we had had Kai or you hop on those calls, you guys probably would have been like, hey, make sure this guy can show you proof of funds. Because really, I mean, that's what it was. At the end of the day, he didn't have the money that he said that he did. And so it kind of delayed our acquisition about two months, which, you know, looking back, it's like, you know, kind of a drop in the bucket, right? Like, not too long. But at the time, it felt like just the end of the world when that deal fell through.

Yeah, I remember. I think. I think I was in. I was on, like, it was around, like, Christmas or had, like, a partial close. You want to talk about that?

Yeah. So, yeah, so I, like, we were going up to my wife's family for Christmas, right? And I didn't want to go up without having closed the deal because we've been working on it since, like, September, and I already.

And you want to. You wanted, like, acquired.com swag, too, I'm pretty sure.

Yay. So I already told, you know, everyone, I'm like, yeah, you know, we're. We're closing. It's whatever, right? And then the deal falls through in November, and I'm like, oh, no. I'm going to look like just the world's biggest moron, right? Going up. And you know how the sale go. You got all the money in your account? No, it's not there yet. Right. So we get to, you know, we start talking with the new buyers just the day after Thanksgiving, right? And they were just incredible. They wanted to move fast. They were just super nice and showing us proof of funds and just really vetted buyers. And so they're like, well, we don't have all the cash right now to do the deal, but because they were going through the SBA process, but, like, we can put down, you know, probably like, 20% of, like, the deal or 15% of the deal right now. I'm like, let's do it. Then we can say that we were officially closed before Christmas. I can wear the swag and not feel like a fraud.

You know, I remember that. I remember that. And then. Yeah. So, I mean, little. Little tip maybe for people listening is, you know, if you're working with a buyer with sba, Loan as, you know, sometimes it. There's some things that can be out of your control because now you're bringing in a third party, which is a bank, and so you're waiting on the bank to approve things. I remember you had, you had a document that was like faxed over to escrow or something like that.

Yeah, the bank was, I mean, they were. I like, I don't want to hate on banks, right. But the SBA loan is, it's just like a total pain. It's super difficult to do. So I think in total, it ended up taking like almost 90 days to get it all the way processed. And like, we weren't like a huge acquisition. You know, like 500 grand is, it's good, but like acquire.com selling much bigger deals. But the SBA loan just, it's takes forever.

The process is the same for 500k or up to, you know, 5 million.

Oh, really?

Typically, yeah, because you have to go through just a number of different approvals. I'm not an expert in it, but every time I've, I've seen an SBA loan come in, it generally will take longer because even once you sign loi, just like you did, you have to go to the bank with a signed Lois, say, hey, here's all the tax returns. Here's the price that we're paying. Here's, you know, clean financials so the bank can underwrite the deal and then issue the loan. So some banks move really fast. I've seen. So it depends on what bank you're working with as well. Some move slower than others. Some are super quick. I'd say yours was pretty good, but I've seen it makes you feel better.

Okay, but I did, I told myself if I got to pay an extra 2% interest rate, I'll do that to avoid an SBA next time. So when I make an acquisition.

Well, tell me about. Okay, so now you, you know, successfully sold a business and, you know, you, you worked with some awesome buyers, you prepared the business well, you built SaaS business. If you had to go and give advice to maybe a younger version of yourself or just another person looking to sell their SaaS startup. What's like the three things that, you know, come to mind that you would tell them, like, hey, he's. These are, these are things you gotta do. Here's some things to avoid. Yeah, three tops, three top tips.

Like, number one, like, just go all the way in. Right. I mean, at first, I like when we first started revive, I was in it, but I'd been doing sales for, for a while before that. So I was like, you know, I'll keep kind of doing what I've got on the side, but just commission only. And I kept doing that for like the first year that I run that I ran revive and like I made good money while I was doing that. But sometimes I'm like, well, did I trade, you know, 150 grand for a million or $2 million added onto my acquisition price? You know, so like if you've got a good idea and if you like it, just roll with it. Right. So that's number one. Number two would be like just network. Right. You know, people aren't going to a threat and that changes as soon as you're out of college. Right. Once you lose kind of that like, oh, I'm a student kind of, you know, phrase. You like people, they're just not going to be as they're still be willing to help you, but a direct competitor is not going to hop on a call with you and show you their CRM and show you the processes. Whereas as a student people would probably be willing to do that because they don't see you as a threat. And a lot of them see it as a way to give back. So like surround yourself with good mentors and then maybe for a third one, I don't know, that just run profitably. Right. You know.

Yeah. That's the path to getting acquired these days is I always say profitability is king and that's what most buyers are looking for. So. And obviously you want to make a business that's actually profitable.

Yeah.

So all great tips. But Luke, tell me, you know, what made you decide to.