When Product Success Doesn’t Translate to Scale

All right, I'm with Hugo, the founder of Primu. Hugo, how are you doing today?

I'm doing great. Thanks Andrew for the invitation and for joining the podcast.

Yeah, thanks so much for for joining. Congrats again on the recent acquisition. For those that may not know you, do you want to give a brief introduction of yourself?

Yeah. My name is Hugo, I am talking now, right now, late night from Amsterdam, the Netherlands and I was the founder of Reitmo, which was a goal management platform which I'll explain a little bit more in detail later on. Prior to Reatmo, I worked as the marketing leader or a go to market leader for various startups and scale ups 15 years before, most notably at EVMOX where I was a chief growth officer and we grew the company from few million in revenue to 100 plus million in revenue and went from 10 people to 700 people and from early stage to the almost, I call it the almost IPO was during the SPAC IPO phase of Corona where everyone was going crazy with this SPAC ipo. Ultimately it didn't work out well and I also wrap up the journey at EVBox during that phase and then I decided to found Readmo 2 years recently sold and since then I'm doing some fractional executive role either as a interim lead growth or lead marketeer until I figure out, you know, the next venture, the next journey.

Right on. That's quite the background. That's all the success. Tell me about revmu.

What did it do?

What problem did it solve?

Yeah, so in a nutshell and also it comes from the history of Prioritiv box. Every time we had to work on the company and become bigger, there was always this conversation about oh, where are we going to track the goals of the company? How are we going to track progress and communicate effectively? And it always ended up in all these bloated platforms like, let's call it like big HR platforms which have a small, tiny goal management, goal management bit tweets a lot of OKR platforms and for the ones that are not familiar, OKR is a famous goal setting methodology of objectives and key results. There was a lot of those. But everything felt cumbersome and the more we grew, the more painful it was getting. Where utilization was great in the first quarter and then it's dropping, dropping, dropping. And I still recall that I think my CEO at EV Box, in the three years we used platform, different platforms logged in maybe once to the system to see the progress of the company. So somehow I felt how is it possible there are so many companies, so many software systems. And this goal management is always a mess. And you know, product uses Jira, someone else uses Asana, HR uses performance management. And I thought that maybe there's a, this is a pain point. And it felt like, okay, when companies are growing, they must have some better lightweight system. And that's what I was hoping to do. Like a simple system where you can track the goals, where you can see the progress of those, but in a different way where it's more simplified, built for teams that talks to you and you don't have to update every single week, but actually, you know, interacts in the systems where you are. That was the initial concept. That's how we got started with some initial traction. And you know, over two years we sold the platform, we added services to it, which is maybe an odd choice to do, but we noticed a lot of companies had more a behavior issue than a software issue. So in the end it became a software and service component. Well, and after two years we didn't grow to the extent that we wished so. And yeah, and we decided, okay, this is might be the time to wrap up. And we decided to start the selling process a few months ago.

Right on. Tell me the business model really quick. What did that look like?

Yeah, so it was in two ways. Either we initially was just like a subscription where we had the traditional team subscription fee, you pay a monthly fee. Traditional SaaS where you have like a SaaS subscription. The difference is that we, we had a model that perhaps people were not. We were frustrated with the SaaS model that you pay per user and, and we felt that with a lot of go management platforms, 50% of the organization doesn't really need to use, it just needs to be aware of the progress. So we actually had a tier of like if you are a team member that doesn't have a high activity of commenting, you know, checking progress, doing reports, then you just pay a symbolic fee and the rest of the people pay a normal fee. So there was like the incentive of like, hey, you actually don't have to pay for your whole team. You can actually just pay for the ones that really need to act with the platform. And rest just needs to see which is a case, a pain point. I still have today where I use Asana or Monday and I have a team of 20 or 30. I don't want to pay for the 20 or 30 because maybe 10 of them are actually using and 20 just need to be aware of the progress, but I still pay the same for everyone. And so that was a subscription model. And later on we added service which was more onboarding process, coaching processes to implement correctly, training the leadership team. So that was more project based where we had a program that could be three, six, nine months and yeah, and that was, you know, it was helping us that people who buy the service and we had the software or they buy the software and we had the service on top. So is it generating cash flow on both ends? Yeah. Nice.

I love this. It sounds like you knew the pain points in and out, you'd use the competing platforms, you saw what you didn't like and you look to build something that would be more aligned with what you were looking to accomplish when you were using those tools. Is that kind of right?

I think the problem, we knew it. Well, I believe that perhaps the founder mistake that myself and plenty many make is they try to tap into a too much of a complex problem and goal management at scaleups. It is a complex problem that sometimes software doesn't solve alone. It's one of those issues that everyone complains that there's not necessarily a single solution. There's multiple ways to go about that. So I think over time what we felt is that sometimes the pain, everyone was interested, everyone was excited or at least our customers and prospects, they'll try the software for three months but afterwards they'll be like, okay, but, but I kind of can live with a pain point with Jira and Asana for a little bit longer, you know, and then delay and delay and delay. And I felt that over time I learned that yeah, the pain point is real, but the way to go about that might not just be more software. And then when we realized that the services were actually always more revenue than the software, we felt that the scalability was an issue. And well, to be honest, me and my co founder realized that okay, is this really the 10x startup that we are really excited for to build? And we thought okay, perhaps it's better to give the chance to someone else to do it on our behalf. And well, that's when we got to acquire and did the whole process. Thankfully otherwise those guys just have wrap up the company and not know if there was an interest out there.

I think that's a great reason to sell. When you realize the business isn't going to scale to reach your goals and rather than just shutting it down or maybe spending another year or two on it trying to grow the business when it just the growth isn't there, that can be a perfect time to find a new buyer that can breed know the energy the business needs, even if it's just a lifestyle business or a profitable small business. So that's awesome. But tell me about your, your experience on Acquire. What did that look like?

Well, I believe that for me it was a little bit, as you mentioned, like I, I, I have the habit of not letting go until I see success or at least try to push to the max. And was bugging me that, you know, I can, I cannot just let this die without trying it more and more and more. Naturally I, I had me and my co founder, we had a few people that worked with us through the last two years. You know, outsourced content, we had content people, we had some experts that join us to deliver the services so we could scale. But ultimately the more services we were giving, the less excited my co founder was because I understand he was a CTO co founder. Yeah. So the platform is the livelihood of his work and the more service oriented we go, the more different profile of people you need to hire. And it started to rely too much on me. I was delivering the services, facilitating and not developing as much of the platform. So we thought about, okay, maybe it's time to wrap up also because we are seeing different visions of where a company should go in a good way. And I felt like, okay, but I don't want to necessarily give it away. And it wasn't really like just listening to different stories of people saying, hey, but why don't you try to publish your story in a platform like Acquire and see what happens. So it was a referral and I got positively surprised one by the interest I think I got. And this I perhaps need to review the numbers, but I will not be mistaken if I didn't have 20, 30 people reaching out, which was for me a surprise because I was like, okay, this is not like a 1 million ARR story or like 500 ARR story. You know, it's more like an early stage two year. We couldn't scale. We had some, you know, we had some, some revenue. We have customers, we have metrics, we have users. But you know, it's not the most appealing story that I felt that people would be interested in. But I got shocked, I got surprised by the amount of interest that was that was there from various different topics. And you know, I got to have conversations with four or five different buyers and ultimately the buyer that was interested felt really connected to the platform, to the story of Leapna, to the brands. And we felt excited to work with him, even if his proposal was even lower than some Other conversations I was having with some other ones. So funny enough, we sold to the one that had the biggest heart to make a success over just you know, financial exits. Let's put it that way.

That's awesome. I think that's smart too. You're sounds like you sold it to a buyer that you think that could take it the farthest where they could grow the business. They could keep making sure the business is alive and the customers are taken care of. Is that correct?

Yeah, that is correct. And we did even things like such as that part of our joint agreement of transition that I introduced him to all the customers that he had a chance of pitching to them. We are still in connections. We have our Slack account that are still part of it that he still ask questions from time to time. He says hey I'm thinking about doing these, I'm thinking of adding these servers. What's your opinion? So it also feels like a nice wrap up Naturally now it's on, it's, it's on him to build up with the team the story from here onwards. But I'm still available for any questions he has. We still have a communication and yeah and it gives a good pleasure to say okay I wrap up my journey but maybe in a year, two years from now, you know it's one of I wish I regret giving giving it away. That's, that's my best wish. I wish I oh he did way better than the I wish to be the sentimental tool years from now. I, I, I truly wish that because it means that he was able to do with it what I was untable and yeah I, I'll be incredibly happy for him if he is able.

That's amazing. It sounds like you want the buyer to be extremely successful with this acquisition and more often than not when I see that that makes the best acquisitions on both sides because that's what buyers, you know want to see is a founder that is willing to help with the transition help answer any questions they might have so they can be successful. So I think when you have that shared view of you know, you can sell the business, get acquired and make the new buyer really successful. That's a, that's a great outcome.

No, truly agree and thanks for those words. Good, good reminder.

What did you do to prepare for the acquisition? Did you do anything before listing or put materials together?

Yeah. So one of the things that helped me is one by default I had this tendency of quite structured on my folder structure over time so that when the due diligence came that actually helped Me tremendous, because I was not like lost. I have the documentation, like 60% done. What really helped was when it got to that stage, there was a whole list suggested by the platform which was like, okay, have these, have these, have these. Which set the foundation to do. Oh, this is good. This I actually don't have. This I don't have. This I have. It is not well documented. So it set a really good foundation for me to prepare some new documentation that I never had the time. You know how it is, the founder Journey document. Up to a certain extent at some. Sometimes you just decide that it's okay, I'll document it later. So it's actually to put some effort to put some documentation, technical documentation, how the product works, some other elements and also legal stuff that I might not, you know, I might overlook. Even if it's a us oriented platform or user base, at least it looked like it gave me the foundation of like, okay, this is everything I have to prepare. So. So I think we are. From my learning that I was happy about is that as a founder, you know, sometimes you might overlook the importance of knowledge, mean management documentation, why you made certain decisions. I am happy that I had quite a lot of those documented because it helped me a lot in a due diligence phase. And he gave confidence to the buyer because when I gave him access to the older shared drive, he was like, oh, this is great. There's so much documentation, so many things to learn. So it also gave confidence, okay, these guys are serious. This is not like a, you know, side job, you know, playing around and see what happens. He actually had, you know, meets tweets, let's put it that way.

Yeah, yeah, that's fantastic. Because a lot of buyers, when they, you know, enter into an acquisition, they're assuming the business is messy and unorganized and they're gonna, they have a concern where they're gonna have to figure out how everything works. When you have all that put together, when you're speaking with the buyer, as you're going into due diligence, it's. It's massive because it gives them confidence and it shows a view into how you run the business, which is organized and structured. And they can learn from all that to again, make them, make them successful. Yeah, that's awesome.

And what really helped in this case was there was something on, either on the platform or on the conversation saying like, or one of the blog articles, I don't know now what was the knowledge of it, but it had an element of like, help your buyer understand who are your best customers and why they trust you? And it helped me, for example, I did screenshots of emails of customers replying with the codes to make sure it was real. Um, and I remember the Ludo, the buyer saying like, hey, you. Well, actually this, this was really helpful because I was like, oh, wow. It's actually an actual email to you saying, wow, what a great work. You know, it really help out with the feedback and not some code that I see on a website that I don't, I don't know exactly how it came to life. Um, so those like emails like gave truth. And of course once he takes over, he can check the emails himself by, by, you know, by checking the workspace. But that, that was actually a really good one that helped understand the power of, you know, good service, good delivery, and hopefully that it can continue. Of course.

That is awesome. What'd you do to celebrate the acquisition when it closed you out to dinner?

I went for a nice dinner with my co founder and we debrief what were the main learnings that we had, what we could have done better, what we wish we knew from the beginning. So we had like kind of a debrief night. We had these dinners more or less once a month, like to reflect and look forward. So we just did a bigger one, let's just say more expensive, you know, put like, you know, use a little bit of cash out to some nice giveaway gift to ourselves and to use it as a debrief lesson. Because what was good to know is that my co founder was also a friend for the last seven years. We got to know each other at Edvox. We already had like collaborated on the retrospective tool just for fun. And you know, it's one of those things that we knew that we were starting to figure out that hey, we might want to have different things, we might have different objectives. We also have the lifestyle impact, you know, like, to be honest, like, you know, the cash flow starts running out and you have mortgages, kids, et cetera. It gets, the pressure accumulates and we decide to bootstrap, which has its pros and cons. But one of the cons is that of course you feel the financial pressure if things are not coming your way. But we said, okay, you know, even if you wrap up, we have to find a way to, to have a graceful exit and, and, and, and stay, and stay friends, you know, because, you know, who knows if you're not going to collaborate again in six months, one year, two years, three years. So, and that was important. For us as part of our founder promise or founder agreement, let's say. So yeah, it was nothing fancy. It was a dinner we also sold literally and we signed right before Christmas. So, you know, it was like we just want to have the Christmas period, enjoy the families. But yeah, was just a really nice dinner. That's how far we got.

That's a nice way to wrap up the year, the holiday season.

Yeah, yeah. It was also high pressure of closing everything legally in the Netherlands. But luckily we just wrap up everything legally on the 31st. So that was right on time. Yeah.

Well done. If a founder came to you and they were looking to sell their business, maybe they were in a similar spot. What's a couple pieces of advice you.

Think you'd give them? Well, one, do not give up too fast. I think a lot of founders I talked to said, yeah, we didn't hit the goals. We decided to just wrap up the business, close the business. And they never even try to explore a platform like acquire to see what potential is out there. What kind of questions, what people are interested or not interested. I do remember recently a founder said, why would I even sell is pre revenue. What's the point? And I'm like, you'll be surprised the kind of people that you might find or arrange and what's three months of your life of going through the platform, giving it an extra shot. If there is a better port, who knows, maybe someone does even better than you and that should be something you are happy with. So not giving up too soon. I think that's definitely one. And if a founder is looking to sell, I definitely, I'm definitely happy. I had really things documented. So yeah, so I would say do not underestimate the importance of having strong documentation to impress a buyer. From the get go. I had, you know, the first five conversations. I quickly realized I had done a few mistakes. I rearrange. I did the automatic NDA and up on the NDA I had an automatic message that had a video of myself introducing myself to the buyer. Why am I doing what I'm doing what I believe is a pain point, a quick showcase of the platform. So it was a six, seven minute video and I just basically there was a great introduction for the buyers that reach out to me. Some of them said, oh really interesting. If there was more traction, I'll definitely be there. But hey, let's stay in touch with all LinkedIn. You know, funny enough, one of one of the founders just recently, one of the buyers recently saw the news on rhythm, said hey, I'M really happy for you. By the way, I have another company that needs, you know, some of you are thinking can we have a conversation with them? And I had like a one hour conversation on policy, marketing and growth. So there's also other opportunities that comes from it, but outside. Yeah. Documentation. Do not understand, underestimate, documentation. Do not underestimate first impressions and do not give up too soon.

That's great advice. I 1000% agree with everything you said, especially the piece I'm not giving up. I think a lot of founders don't realize just how big of a market there can be for what they built. Even if it's not profitable or like you said, even if it's pre revenue or just getting off the ground, there's always buyers at every stage looking at different opportunities at acquire and it's, there's no downside. You know, if you're, I think if you're wondering whether you should look to sell your business or if there's a buyer or if there isn't a buyer, the, the main way to find out is to go look and if you don't find one, then you have your answer and you know what to do at that point. But I mean it's at least a door I think every founder should explore. So I think it's great advice. Well, right on. Huge congrats on what you've accomplished. You've really accomplished what every entrepreneur dreams of doing. I know building a startup is extremely hard. What are you doing? What's next for you? What's the next chapter looking like?

Well, so, so the good part is that two years of building a startup didn't wear me down to avoid doing any other ones. So I definitely want to build again. I think, I believe, well, I feel and believe the pace of AI development is so fast that I'm waiting to see what's coming next, you know, because I feel every time I'm trying to build an application there's something faster going. So I'm like, okay, there's so much fast development, we're going to wait a little bit longer and build on the side a few things. So I'm still building on the side smaller applications. So one thing I noticed that I was trying to solve too much of a big problem. So I'm trying to now to build something to solve smaller problems, of simpler problems and just seeing if it sticks. In the meantime, while I'm building on the side, I am, I am running as a fractional so I help scale up most of my much scale ups above 10 million ARR on the next phase of growth as interim CMO, interim growth officer or lead growth. And I want to do that just probably for another year, year and a half. But again, if I build something that has some traction in the next couple of months, things changes. But I'm definitely going to keep building on the site until that happens, helping scale ups hit the next phase of growth or at least unlock some new way of thinking that they might be struggling now in this era.

Right on. Well Hugo, thanks again for coming on the podcast. Congrats again on the acquisition. If people want to follow you online, where can they find you?

LinkedIn. Very open. Try to reply to everyone and to the extent possible. But yeah, LinkedIn is the best way to follow and to reach out to me. And yeah, the only thing is that do mention why you are reach out when doing a connection invite because if it's an empty connection I might overlook it. So yeah, always good to give a reason or just a shout out that they heard the podcast or something like that. Then I'll pay more attention to it.

Sounds good. I'll put in the shout out. Hugo, thanks again for coming on and excited to see you keep building.

Yeah, thanks Andrew. Appreciate all the work you've done with the platform and thanks for helping me out with the exits.

Appreciate that.

Cheers. Cheers.