Startup Acquisition Stories with Varun Kundra, Co-Founder of Beam Commerce

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I'm here with Varun. Varun, how you doing today? Good.

How are you, Andrew?

Good. So you recently sold a Shopify app for six figures on acquire.com? yes. Is that, is that accurate to say?

That is accurate.

All right. And then for people that don't know you, do you want to just give a brief introduction of yourself?

Yeah, for sure. Hey, guys, I'm Varun. I'm a co founder of Beam Commerce. We make Shopify apps that do a couple things, but we're mostly focused on upselling and cross selling. So if you're a Shopify merchant, meaning you want to generate more revenue, you can check out our apps after sell or upcart.

Nice. So when it comes to this specific product, product quiz builder, you got 113 reviews. This looks like a good application. What made you decide to build this?

Yeah, so actually we bought it from another company. It was an agency in the Netherlands, and they were trying to sell off the app to sort of focus on a bigger project. And we really like the category, we really like the build quality. We thought we saw a lot of potential to grow it, so that's why we acquired it.

Oh, so you're a serial acquirer. How many other products have you acquired, if I can ask?

Yeah, so we've done four transactions, all on acquire. So we bought this company or this product. We also bought. We also sold to others. And then just recently we sold this quiz builder as well. So there's four right there.

Right on. Yeah, you are. So I have to apologize in advance for making you create multiple seller accounts.

Better that way the emails are more, you know, focused. We don't get spammed with too many things.

Yeah, the thought, the fun fact behind that was I actually assumed entrepreneurs had one startup they were focused on. And yeah, man, was I wrong. So we'll get that. We'll get that fixed soon. Okay, so you. You acqu. This and then you. You resold it. That's. That's incredible. Walk me through. Just kind of that thought process. Is that kind of your firm's strategy? You acquire, I assume, you know, improve, grow the product and then resell?

Yeah. So I wouldn't say it's our strategy, but that is what happened in this case. It was a similar sort of thought process to, I guess, the company that we originally acquired it from, um, they sold to focus on their bigger products. And, and we did the same. Uh, it just felt like if we had, you know, one less app to focus on, especially this one, which is a little Bit more technically complicated and involved. It would allow us to grow better and faster on our other products.

Nice. And so you. You sold four different things on Apart.com. is that correct? Can I just confirm that?

So I've. I've bought one and sold three.

Okay. Did you walk me through maybe, like, how long did it take each one to buy and then to sell?

Yeah. Um, so I guess it definitely, like, it. Uh, I would say the buying one was relatively fast. I mean, we just had, like, one target in mind, and it was just about, like, getting to the right terms that would satisfy both parties. Um, that one maybe took, like, three weeks, if I recall correctly. Um, and then for the selling, I felt it was easier to sell the smaller products. Um, they were, like, in the 10-20k range. Those were faster, and that would also say, like, maybe two, three weeks. And then this most recent acquisition, this most recent sale took longer. Uh, it took about two months.

Nice. And that makes sense as it was larger. But that's. That's awesome, man. I love to hear those stories. It always surprises me when I hear people just buying so many different products and being both a buyer and a seller. So that's. That's awesome.

Yeah, it was fun. I mean, definitely not expect to be doing this, like, a year and a half ago, but it's been a great experience.

That's awesome. So let's. Let's focus on this, you know, specific. The sale of this business, even though you. You did buy it. And maybe you can kind of culminate all of your. I just want to kind of get the journey of you going to acquire dot com. How is it like, okay, so you decide to sell the product you list on acquire.com. what was, like, your initial reaction? Let's pretend it was like, your first time, like, yeah, like, what happened how, like, did start reaching out? Like, what. What happened after you. You go live.

Yeah. So when you go live, I mean, for us and for all my experiences, it's been relatively quick. Like, I would say within a couple hours, you get people reaching out for, you know, more information, and then you accept their request, you decline their. Yeah, I would say it's definitely faster, I think, for the smaller apps. I think that's probably just because there's less, you know, less buyers that can afford to buy, like, a larger company, which makes sense.

Yeah. And that's kind of true with, you know, any asset, like. Yeah, specific, like, homes, maybe. I'm terrible at the analogies, but, you know, when you see a house worth, like, $100 million or like $200 million? Yeah, they got a list of like 20 people that can afford that.

Absolutely.

So as the asset gets bigger, sometimes your buyer pool can get smaller and everyone can afford. I shouldn't say everybody, but there's a lot more people that can afford, you know, you know, four figure acquisition compared to a six figure acquisition. Sizable difference. Okay, so you, you have buyers reaching out. How do you vet the buyers? What was your process to ensure that, you know, you weren't wasting your time on people that weren't necessarily the best fit?

Yeah, so I guess the first thing is sort of like what the buyers report about themselves. So like, oftentimes they have like a revenue range and there are some requests that are outside, like your listed price and the revenue range. For example, let's say we were selling for like 500k. You might still see some buyers who are saying like, they can only do acquisitions between 0 and 100k. So in that case you can pretty quickly filter them out. Second step is just like a quick Google search, like, who are these people? What's their background? Have they done any similar acquisitions on the past? Things like that, you can kind of get a sense for how legitimate or how serious a buyer is from those kind of things.

Nice. That's good. That's good feedback. And then, okay, so you have a lot of buyers. You, you vetted them. How did you land on the buyer that eventually acquired this app?

Yeah, so actually what happened was the acquirer that, the acquirer that acquired this app, we had sold him a previous app before. So he reached out, he saw the listing and he was like, hey, I'm also interested in this. So I mean, that was something I didn't realize. I didn't realize that he would be interested in this app as well. In retrospect, I definitely should have reached out to him, but. Yeah.

Nice. Well, glad it worked out. How did, how quickly did you move from, say, loi to close?

Yeah, so with this app it was pretty quick. We had an existing relationship with the buyer from the previous transaction. I trusted him and I knew he does business pretty quickly. So I would say, honestly, maybe within like, maybe 10 days.

That's fast. Yeah, Yeah. I think trust and just goodwill is just so important with acquisitions because if, if a buyer says you're going to do something and they're experienced, that just makes the whole process so much easier.

Yeah.

Especially if you've worked with them in the past.

And I think one thing that helped here was like, because of our relationship with the buyer, we, you know, we like to. Not to go do escrow at all. Like, we just wired the. He just wired the funds, so that saves a lot of time. I know escrow. Otherwise it's quite the process. We had done that before as well, so.

Oh, dang. I highly recommend escrow to everyone.

Yeah, I should say that as well. Everyone who's considering an acquisition, do escrow. This is our case where we had the trust and we had the past experience.

Yeah, I'll approve it in that instance. But never, ever acquire anything without escrow. I've unfortunately seen some disputes over that which were luckily resolved. But escrow just, you know, especially if you're not comfortable with the person. But you were. So I'm really glad to hear that worked out in terms of due diligence. So Shopify apps, specifically, due diligence on Shopify apps is usually pretty straightforward. Can you. Or maybe it's not. Can you walk me through just kind of the due diligence process that you do with Shopify apps, then maybe how the buyer for this app did due diligence?

Yeah, so the process that I've done is basically, basically just trying to see it from the merchant's point of view first. So, like, really deeply understand the product and the problem that it's trying to solve. So, you know, install the app, try to use it, like, set it up, see all the features that it has, how is the user experience, all these kind of things. Like, when you figure that out, you can also see, like, are there potential rooms for improvement here? Like, maybe the UI UX isn't great, or like the app is a little bit slow to load things like that. And then the next thing I would look at is like the specific category or market. So Shopify apps, there's like, I think over 8,000 of them now. So there's quite a lot of different categories and different needs that are being served there. Some categories are a lot more competitive than others and some categories have a lot more potential than others as well. So sort of just like figure out, like, what are the keywords that are most relevant for that app? What do people search for when they try to find that app and then figure out that competitive space. Right. Like, what's the potential there? Is it too crowded maybe? Is there a room to. Is there room to grow?

You put the customer hat on and you act as if you're the customer with that problem. How do they find it? How are they going to review it?

Yeah, yeah, I think that's like a really Helpful way to look at it because like that's how, that's how your customers would look at it too. Right. Like it's just that sort of natural way. If you're able to put yourself in their shoes, it's very helpful.

Yeah. So you're, see you're, you're kind of secret shopping something you're going to buy where, you know, and I recommend this to, to all, you know, buyers is, you know, use the product like research reviews, see what other customers are saying. Yeah, all that stuff. Sometimes you can find good, bad stuff like, hey, I don't like this thing about the application or the company or whatever it may be that could be a growth opportunity, red flag or, you know, you see a lot of just really happy customers and it's very help, help business. But just doing that, you know, simple due diligence. I love how you brought that up. Okay, moving on. So you get an ally, you get the asset purchase agreement signed, transfer over the assets. Did you have any sort of transition period planned with the buyer? What did that look like?

Yeah, absolutely. So we had two things. One was that we agreed to provide our customer support person to the buyer for I think it was a period of three months. So I think that was helpful for them to also just like, like get familiar with the app and the sort of customer support requests and things like that before they take it on themselves. And then second was, I mean, there was just a general questions and support. Like we kind of agreed. I don't remember the exact terms, but it was something like for the next, I would say about month or so after the close, we would, you know, we'll be open to answering questions or providing any guidance or advice.

Nice. I like that. Yeah. Because anytime you buy something, you know, there's always going to be some additional. I always say it's not like handing over cars or, you know, keys to a car. Like, here you go, you're on your own. There's always just some customer with a weird discount plan or yeah. They don't understand or some feature and you break it and you're like, I don't know what I did. And you're like, oh, it just to you, it's like, oh, just touch that one button. It's fixed to the, to the buyer. They're spending 10 hours trying to figure it out without you.

Yeah, for sure. And one thing that I did this time and I would recommend is create like a slack channel between you and your team and the buyer and their team. So then like your customer Support person can talk to their customer support people. You can, you know, the product person can talk to their product person. That way. It's not like everyone's going through you. Like, I have like a hundred email thread from before the Slack channel about, like, all the different questions and things. So just it's. I think it's a better way to manage your time and to make the transition process cleaner if you have, like, both teams. Teams being able to talk to each other.

Yeah, I. And I especially recommend that for, you know, larger acquisitions as well. Just, you know, to keep, you know, the, you know, the deal moving. Because there's a saying like, you know, you always want to be, you know, selling until the deal actually closes. And what I mean by selling is, you know, you're making progress, you're keeping momentum. Data requests are being fulfilled all the way until close. And a Slack room is a great way to do that because email, you can kind of wait two hours. Slack gives you. I don't know, when I get a Slack message, I feel like I got to answer, like, immediately. Yeah, maybe I got to work on that. All right, so what are you doing now? I assume you're probably acquiring more stuff. Are you selling more stuff or what are you up to these days?

Yeah, I mean, I would say, like, we're pretty focused on growing our existing products after sale and upcart. But with that said, like, I'm still browsing Acquire, and I'm sure if another exciting opportunity pops up, I'll take a look at it.

Nice. And then I guess I always like to ask this question to everyone I bring on the podcast. But give, given just like, your experience, you know, on the buy side and the sell side, you know, buying startups, Selling startups. If you had to give just like three tips to someone entering the space, what would that be?

Yeah, so I've spoken about my experience a little bit on Twitter. I'll try to recap, I think, what I said. So on the buy side, I think first thing is, like, really make sure you understand the product and the market. And it's pretty difficult, like, if you haven't had experience. But I think, like, just try to get as deep and as obsessed as you can about what's going on there. I feel like without that, it can lead to some issues if you do close because you might not be able to grow that product and you might run into things that you wish you knew beforehand. On the sell side, I would say try to talk to as many potential buyers as possible. And also I Think if you can sort of leverage different offers against each other, that's pretty helpful. If you only have one buyer, they have all the leverage. But if you have three or four, then you can say, hey, this person offered me this. With these terms, what do you think? Can you. Can you do better than that?

I. I could not agree with you more. I just want to, like, thank you for saying that, because I think a lot of people when they list startups on just any marketplace or really just building any startup, they. They feel like someone's going to come to them with a big check. Like, you have to talk to buyers. Like, you have to get on the phone, you have to get them interested, you have to sell them on the growth opportunities, the things that you have done right, the things you haven't done right. You have to respond to data requests quickly. And then that's how you get multiple buyers. And there's a quote, you know, if you have one buyer, you have no buyers. So you want. You always want to assume the buyer is the buyer until they are not. So follow up with buyers, get on calls with buyers, build goodwill. So I love that tip. I couldn't recommend it more. All right, you got one more tip for buyers and sellers?

Ah, let me think. There's so many things it's hard to say on the spot. You know, I guess one thing is like, to perhaps like, like people. People in tech and VC say like, sort of to raise before you really need to like, raise before, you know, before you actually, like, are in need of funds or if you're, you know, if you're desperate. And I think that's sort of like, with the leverage thing as well. Like, if you're doing well and you are considering, you know, selling your product, selling your. Your app, then maybe just list like, you don't know what, what people offer. And you'll definitely get better options. If you list earlier when you are having, like, really good growth versus, like, okay, my product has now, like, maybe flatlined or plateaued, then I should list that time. You, honestly, I feel like you never really know in terms of, like, the. The buyer universe that's available. There's definitely, like, a lot more than I expected, and lots of the acquisitions that I happened, that. That happened with me and that I've experienced are. Are not what I had predicted before.

That's great advice. Well, Rune, thanks so much for coming on this podcast. If people want to learn, you know, more about your. Your story and just find you on the Internet, where. Where can they find you?

Yeah, absolutely. So they can check out my Twitter. It's at Varakundra V A R K U. And then they can also head to our our products. So if you go to aftersold.com we have a Shopify app that helps with post purchase upselling. And then our second product is Upcart, which is a sliding card drawer.

Right on. Well, I'll put those in the show notes, so if anyone wants to check those out. Thanks again for coming on the podcast and congrats on the success, man. Multiple acquisitions. Love it.

Thanks, Andrew. Great to be here.

Cheers.

Cheers. Then for that app, what do people search for when they try to find that app and then figure out that competitive space? Right. Like, what's the potential there? Is it too crowded maybe? Is there room to, is there room to grow?

You put the customer hat on and you act as if you're the customer with that problem. How do they find it? How are they going to review it?

Yeah, Yeah. I think that's like a really helpful.