My bluesky strategy to a $100M valuation, but what really happened...

Foreign. To the first lesson in the business fundamentals, the blue sky strategy is something that we developed over the 10 years of building our businesses that became the North Star of my annual planning. And every single month when we would review our okrs, which we talk about later in the fundamentals, this was the document that I would give to all of my leaders and all of the employees so that they understood exactly what we were working on throughout the year. Now, this document is malleable and you're allowed to change it to anything that you want for your own business. But this always allowed me to very clearly explain to everyone what I wanted to happen within the year. And in 2022, this was the year that we sold the business for $20 million Canadian. So clearly it worked. Now, in that time frame, I wasn't allowed to tell too many of my employees about the acquisition that we were working on in the background. So I still planned out an Entire Year of OKRs and Strategic Planning and what everyone was going to be doing for our 25 plus employees while in the background working on the acquisition with the private equity firm. I'm still got my estated cup here. It's lived on. It was, I took this framework from Amazon, had a six page memo where they had to before every meeting if someone was going to bring a new idea in, they had to explain exactly what the hell the meeting was about. And way too often we go into meetings and we don't actually work on what we're supposed to be working on. Meetings can always get carried away. And so if you want to go on ChatGPT and look up the six page memo, I'll even put a document in here that reviews it. But this is what we used and it was incredibly successful. It allowed us to align the entire team. It allowed me to communicate exactly what I wanted to happen. And so let's dive right into this then show you the template that we created for you so that you can do the exact same thing in your business and create, customize it. I was always a big fan of ripoff and duplicate R and D. So R and D this for whatever works for your business. But I'm going to go through ours for 2022 and it was again incredibly successful. And I hope that every entrepreneur has access to a document like this because you can share it with anyone. You can share it with advisors, you can share it with your board, you can share it with your employees, even your friends if you need to, through the ones that you trust. And they want you to win because they're going to help you improve to make sure that your planning is actually getting towards the North Star of your business. So let's dive right into this. Our plans for 2022, the vision statement for Estated was Estated is going to be the leading property intelligence software. Estated's leading property intelligence software provides property proprietary analytics products data to the financial, insurance and real estate markets. So if you see what I did there, not only was I very clearly and succinctly explaining what our product does, I was also telling everyone exactly what markets we're going to be selling into. Not every single One of our 250 plus clients that we had at Estated was in those industries, but our core focus was on those industries because those were the highest contract values that we could find. Going into the next part 4 Fortune 5000 companies trust estated to power their workflows and applications. Because we're the trusted leader in the property data industry. The estated software provides the most accurate public record and additional property data in the industry. Millions of property lookups or searches happen every single day. The estated machine learning, AI and blockchain tools are improving the public record data. We have 247 providing our clients with the most accurate property data in the industry. An incredible public or private company will acquire a stated within five years at a valuation above 100 million. Now like I said, we only sold for $20 million, which in my eyes was still a very big win. It's been something I've been going to therapy for. I'm not even gonna lie. I'll talk about that more in the happy healthy human section of this. But I always wanted to sell my company for nine figures and one day I will sell a company for nine figures. But this one, I, I wasn't passionate enough about the industry. I love real estate. How much I love real estate data I'm still reflecting on, we'll say that much. It's February right now, in January I was let go from Adam Data. I served my 16 month earn out. I think we did a fantastic job on it all, but it just wasn't the right industry for me. So I still take making $20 million owning nearly 70% of the company as a massive win. So right here you can see this was my north star big hairy audacious goal. Bhag. I don't like big hairy audacious goal. It just sounds terrible. But for me I needed to be able to explain to my employees where the heck we wanted to go. And this was the vision statement of the company. Your business, no matter what you're building, is going to require a vision statement. No matter what you do, you, you need to be able to clearly explain what you're trying to accomplish, why you're trying to accomplish, who your customers are and what you're selling. And this I would say was pretty darn good because we got a fantastic outcome. In one of the next videos in the business Fundamentals, I also go through exactly how we crafted and it took years, the estated core values. We are happy, healthy humans. We are ambitious and accountable. We thrive in autonomy. We set expectations, clearly communicate and we achieve results. Now these are very succinct. In the later video I'm going to walk through exactly how we got to these and how we actually lived them within the company. Because you could be an Enron and write honesty on the wall and never actually follow through with it. But one of the things that I want to bring, especially to the current Internet entrepreneurship guru space, is authenticity. It took us years to get to these. We had to change them iterate constantly. I'm a huge believer in Kaizen. You should always be trying to improve every single day, get 1% better. But we also had our core values and I wanted to remind everyone every single time that we opened this document that they could see the stated core values and that helped us align our team. Incredibly valuable. And I talk a lot more about values and why I think they're so good. The next phase of our blue sky was just strategic plans. Where are we going? What are we trying to achieve? My five year plan was to get to 20 million in ARR and I thought at a 5x multiple we would be able to sell for a hundred million dollars. Now that didn't happen. A new opportunity came and I jumped on it in 2022. I don't know what in the universe came down to me, but it just told me to sell everything and I really did. I sold my real estate, my rentals. I sold another Carfax for homes business which I talk more about in this course. And then we sold estated to Adam Data Solutions, which is owned by Lovell Minick, a massive private equity firm based in Orange County. Our three year vision was to get and I actually thought 20 million in ARR. Now Adam, when they acquired us, we're at about 40 million in ARR and every single month we were taking a little piece of their pie. So we were on a path to eventually get there. These numbers were not unrealistic. Yes, they were very large. We were Only at a million and a half in ARR at the time. But I wanted to lay out to everyone where I thought we could go. And so our three year was to get to 12 million in annual recurring revenue, which is a million a month in MRR. And I thought we would need 35 staff to get there. Our 12 month plan, now mind you, I gave this to my team January 1st. You know, my leadership worked on it earlier in Q4 of 2021. But the 12 month plan was to go to, you know, from 2.2 million I think or 2 million bucks, 2.3 where we were at there, to 5 billion. So double our revenue. And in the past two years we had doubled our revenue. So again, this wasn't an outlandish goal. We had a strategic plan to get there and I wanted the whole team to know that this is where we were trying to go. That's 415,000amonth in MRR. MRR and ARR were two numbers. We tracked every single minute of every single day. We used ProfitWell and Stripe to track those. And I figured our team would be about 25 people. Our goal was to get to 25 people, which we were actually pretty darn close to when we were acquired. I think we're 18 with five part time contractors. So then the last time that this was updated pre our acquisition in August was in April. What was our ARR? We were at 2.3 million, well on our way to 5. We were at 192,000 in MRR and we had 16 full time employees. Our Q2 goals. This was our last quarter of goal setting. And like I said, this document's malleable, you can update it at any time. But what was our goal? The next 90 days as of Q2 were to increase ARR to $3 million. Increase leads for marketing to a thousand leads per month. Launch version one of our property intelligence platform. Evaluate two new data providers. So the reason that estated was acquired at the time that it was acquired was we had a renewal with our biggest data provider who allowed us to create our products and they backed us into a corner, told us they were going to 10x our costs. It was one of the craziest conversations and back and forth I've ever had in my entire life. They were going to 10x our costs and they wanted 50% rev share on everything that we sold going forward. This was a no go for me, this was a no go for my investors and this was a no go for my team. And this is one of the Biggest reasons that we ended up selling it didn't change the plans of the company though, because I needed to tell my team that we were still going to be a business in six months, even when that contract expired. It was one of the hardest periods of my life and I talk a lot more about that in the happy, healthy human phase of all of this. But. So we had These are my 90 day goals and this is what we would create okrs with our Q1 goals. You can see what's highlighted in red and what's highlighted in green. The red ones we missed. We got to an ARR of 2.7 was the goal. We missed it by 440,000 and we got to 2.3. We had a net loss of customers. The industry was changing. We started to see the effects of the all the money printed and the chaos of 2020 and 2021 and we missed that goal. So that's why it's in red. Green. Renew our Black Knight contract. We were in deep conversations with renewing, which would have committed me to this business for at least another five years. We were looking at a five to seven year renewal with Black Knight. Now this might be a little too transparent. I'm not sure if they're going to like to hear that. But it didn't work out. At the end of the day, we ended up going with Adam, selling the business to them, which then they shut down and we rolled all of our customers over to Adam and well, you can talk to my customers if you want to know how that went. Begin conversations with other data providers. Unfortunately, those conversations basically went nowhere. The next thing was increase cash reserves. We had broke even. We were starting to make money. An absolutely beautiful thing that happens in startups. Very rare, but we were in a position and at this time in the world, a startup wanted to be break even. Our investors called us pre pandemic CEO emergency. I'm a huge fan of Foundry Group for giving us this advice. They're like, josh, get out of your office, draw down all your lines of credit, have as much cash as available and make sure that your company can last 18 to 24 months. Because this is gonna be turbulent times for startups. They were 100% correct and that's some of the most valuable advice I've ever gotten and I'll never forget it. And so let's keep going through this document because I don't wanna spend too much time on it. Annual OKRs encourage, promote and hire happy, healthy humans was the objective. This is a people goal. I always Started with my people goals because they were the most important part of my business. I needed to have good people within the company. So we did surveys weekly to check in on everyone. I guess these ones were said quarterly, but we just had a little donut app within Slack where we could track that, add new perks, make sure everyone's benefits were good, bring in one guest speaker every quarter to help out the team, make sure that their mindset was right, make sure that they were physically feeling good and just help them out. Why are we doing this? I always wanted to be as clear as I possibly could of why our objectives were there. The only way to be successful is to be a happy, healthy human. I talk a lot about this. Happy humans are better to be around. They're the best version of themselves. They come to work energized and excited and this just creates a good culture which was extremely hard to facilitate in a remote Covid environment. But I wanted to make sure my team knew that they were still the priority. What was the next one? Increase the valuation of estated for employees and investors. Hit our ARR goals. Implement more employee incentives. Why are we doing this? We wanted to have a third year where we doubled our revenue. I sincerely thought it was possible. If things would have went as planned and our data issues wouldn't have existed, I really think we would have taken way more market share in the latter half of the year because our competitors didn't adapt as well as we were. We were a small, nimble, lean team and we were obsessed with customer success. And I thought that differentiated us night and day compared to our competitors. The next one launch our new software. This one didn't end up working out because we kept running into data problems. We had the engineering intelligence to do it, but we just didn't have enough data to actually succeed on it. So this one we would have failed on. And if you're an engineer, you can go through these okrs. I don't want to spend too much time on this. Why are we doing this? You guys get the gist of why we do okrs. The next objective? Expand estate. Its brand awareness. With the dynamite in the marketing department, we had hired two new pretty experienced marketers. They were doing a great job and we really wanted to increase our lead flow every single month so you can see the growth. And these key results all have numbers so that they're measurable. Why are we doing this? You get it? Now we're going to go into the blue sky portion where I just talk about each department within the company so that each leader within that department knows exactly what I expect of them and I would work on this with them. So we have a people part because I always start with people. They're the most important. Q1, Q2 finance and admin. Q1, Q2, marketing. Q1, Q2. So as you can see, if we would have continued through Q3 and Q4, we would have Q3 and Q4 in here. But we ended up getting acquired, making 20 million bucks. Fantastic outcome. All my employees got three months severance. We paid out. Their options were deemed nothing. I'll talk about that in maybe part two of all of this. When you raise capital at a certain valuation, what can actually happen? But this is how I measured everyone. Marketing, sales, customer success, product, product engineering. Our product and engineering were two different departments because our product was customer facing and the engineering was all backend. So if you're a tech company, I'm sure you're in the same boat and you should probably have this. We also had a data department because data was one of the most important parts of our business. And at the end of the day, that's what actually got us to where we were. We had great data and we made it very accessible. Legal. Well, when you're about to get acquired, you're going to notice you need really good lawyers. We used Osler in Vancouver. They're a Canadian law firm and they were fantastic. The next phase of the blue sky was I had reflected on what 2021 was. How did we do? How many people did we hire? How much did we increase? ARR, if you look at that, we went from 734k to 2.1 million. That's incredible growth for a startup. We were profitable for the first time. We had 10 new nationwide deals. Those were what our bread and butter of what we were trying to acquire. Those were the state farms that we had, the Swiss Re that we had, the kin, insurance. We had incredible clients, Hippo, you name it. We were in insurance and mortgage and real estate. Those were the clients that we were looking for. And we wanted household brand names. Again, this was the beginning of the year of what I planned out. And you see people, finance, marketing, sales, success, customer success. That was product engineering, data. And that's the whole document. And that's it. If you can understand how simple this is, even though it seems like a long document at first, this allowed me to communicate exactly what I wanted to happen to my entire team. And, and that's why I wanted to share with all of you because yours does not need to be this complicated. We're actually building this out for you guys. Well, I could show you my everyday entrepreneur blue sky because of course, I did it for this business. I had to be able to explain it to the team that I have helping me with it. But we've created the everyday entrepreneur blue sky template. Now we're going to add in a few more things here. But of course, you need to have your vision statement. You need to figure out what your core values are, which in the next video I'm going to share with you, you need to have your strategic business plans. What are your goals? You, as the owner, should for sure know these things and know what you want to get out of this. What's your quarter like? Your 120, your 90 days. And then after this, we're going to add in a few more things of the blue sky of your departments, of what you expect from each of them and work with your leaders on this. Bring your friends in, your advisors, like I said. But this document was incredibly valuable to me. I wanted to make sure it was the first thing I shared with you all. Because every time I I try and analyze a business that I'm looking at, I'm expecting to see something like this so that I understand what's going on. So next we're going to go into core values and then we're going to go into okrs, and then we're going to go into some product stuff and then just people, because people are so freaking important in your business. So thanks for watching. Can't wait to see at the next one.