From Near Bankruptcy to a $400M Exit: Kirk Simpson's Wave Odyssey

Those venture capitalists are seeing so many different companies. The question is, is how do you stand out? And he talked about the fact and we all agreed, you know, it really takes one slide where you want them to sort of perk up right at the beginning of the meeting and go, wait a second, what? What did I just see? Because I don't usually see it. And so you've got my attention.

Welcome to the Startup. Welcome to the CEO Show. I'm your host, Mark McLeod. In this show, I speak with CEOs, VCs and other stakeholders in the high stakes startup game to help unpack actionable insights for how CEOs can grow themselves and their companies all the way to a massive exit. For this inaugural episode, I had the great pleasure of sitting down with Kirk Simpson. I've known Kirk for over 13 years. He built his prior company, Wave accounting, to a $400 million exit. We unpacked all the lessons from that, the decision to sell key moments. We talked about great things like how to establish healthy boundaries and lots of other great topics. I really hope you enjoy this conversation as much as I did. Let's get to the episode. So a real pleasure to have you here with me today, Kirk. As we were discussing before we got started, this is actually my first recording of the Startup CEO show.

I feel honored.

Which makes me think Reid Hoffman's quote. For those who don't know, Reid Hoffman is a co founder and CEO of LinkedIn, partner at Greylock Ventures, basically knows what he's talking about. And his advice to founders is like, if you look back on your first product and you're not embarrassed, you released it too late. And so hopefully when I look back on this first podcast episode, I'm not embarrassed. The good news is I ask CEOs questions for a living. And that's kind of basically what I'm going to be doing here.

I'm wondering if you're basically. If you're basically implying that your first. Your first guest, you're going to be embarrassed about the first guest.

So no more of myself.

I'm not sure if I'm. It's going to be fun to be the first one or not.

Thank you for clarifying. No, no more 100% me as a perfectionist. You know, let's face it, the first Tim Ferriss show probably wasn't as good as the latest. You know, this is true. We first met back when I was at RealVentures. That's right. And I was probably the only CPA who was a VC in Canada. And Therefore particularly sympathetic to the real the Wave accounting pitch. I'd love to start by just digging into your experience. We could probably spend a day unpacking that, let alone an hour. But the whole purpose of this podcast really is to give CEOs at any stage just real actionable insights, real talk, the stuff that, that they're dying to hear and never do here. So, you know, I realize every startup is different. You know, nobody's operating Wave at this time. Right. Everyone's context is different. But hopefully there's some kind of nevertheless, actionable insights, little takeaways. And so I'm really hoping we can get into that. And you know, so first of all, Wave was like, I think, a 12 year journey, start to finish. You know, looking back, you know, just what were the highs and lows and key moments for you?

Yeah, well, first of all, thanks for having me. Secondly, we started the business in 2009. My co founder, James Lockery and I got serious about it in, in early 2010. And I would say looking back on the journey, I mean it's, it's, it's one thing to be in the middle of it, it's another thing to have a little bit of time and, and you know, some hindsight on, on looking back on it. And I think what I'm so grateful for is that we basically experienced kind of every part of the startup journey except for, you know, unfortunately ringing the Bell, you know, 2010, very different time, as you well know, in the Canadian tech scene, in the Canadian venture capital scene. And so, you know, what stood out for me in the early time was just the amount of pitches that we had to do with, you know, some good investors and some really, really terrible investors. I've got some great, terrible investor stories because, you know, back then with angel syndicates and this kind of stuff that were, you know, big in the Toronto market. Just a lot of very, you know, there wasn't a lot of experience around high growth tech startups in Canada. And so it was a real grind getting that first, you know, cash influx into the business and then it really accelerated quite quickly from there. Our model of giving away the software for free, you know, tons of downside later on. But you know, at the beginning, an incredible, incredible marketing machine that, you know, would blow away VC's expectations of onboarding small business customers. And so, you know, it, it, we had a hard time raising the seed round. But then by the time we got to the A round in fall of 2010, you know, we had a lot of interest in the company and we brought on Dev Ulurker from CRV and he had a massive impact on the company. 2011, 2012, we were really riding a rocket ship. And then all of a sudden we kind of realized we had a very crummy business and needed to make some significant improvements to the product. We came close to selling the business to zero in 2013. I think that fell apart right at the very last minute. That was really hard to recover from. So we, we just experienced a ton of the ups and downs all throughout the journey, including being, you know, 10 days from bankruptcy in 2015. So it really was a lot of really high highs and a real. A lot of really low lows. And that's kind of the best way to describe the journey we had.

Wild. Yeah, thanks for sharing that. Fascinating on zero so much. I'd love to unpack there. You know, as a guy who sold a lot of companies, you know, for a living, it's such an emotional journey. And, you know, part of my role as an investment banker was to. To be the rock. Right. The founder is going to go through the highs and lows. Picture the Ferrari they're going to buy or, you know, the cottage they're going to build or whatever. Yeah, it's really hard to. You know, VCs often have a blocking. Right, Right. Often have a veto on a sale. And I remember CEOs would often ask me, like, you know, hey, do they use it? And of course, my experience was the best ones don't, because if you block someone from a sale, like, they're just not going to be motivated. Like, how did you find the motivation after you were so close to the finish line there to keep going?

You know, it was a really, really tough situation. And I haven't talked much about this story, but we were right close to the finish line, including, you know, them asking me to move my family and I to San Francisco and negotiating all the different elements of that. That's how far along it was. And to be honest, the business at that time, we knew, required a lot of effort and figuring out to take it to the next level. And so, you know, it wasn't the exit that we were hoping for, but it was. It was good. And, you know, by that point, we had raised a lot less capital than we did by the time we ultimately sold it. And so it was a. It was a decent outcome. I remember getting the news right at the end that the board had blocked it, and I couldn't understand how that could happen given that, you know, the CEO and The CFO and the COO were all on side. It was still a founder CEO. The rationale for the deal made sense. You'll remember back then zero was really floundering in North America. It seemed like a really great opportunity to sort of turbocharge that and take a run at things. Anyways, I got the news and I happened to be with my family at my parents cottage and you know, probably the one time in the entire journey where I will remember being almost catatonic, sitting in a rocking chair in my parents cottages living room, just really unsure how I was going to find the energy to sort of recover from that and how James was going to find the same thing and how we were going to, you know, look the team in the eyes and profess to have the confidence required to take the business to the next level when you know, we were willing to, to sell it two minutes before. So you know, as you have felt with many founders many times before, I think it's, it's so easy to tell a founder, you know, make sure you don't fall in love with the deal, make sure that you know, you're, you continue to run the business so that if it falls apart that you can, you know, be ready to, to take it and keep running with it and all those kinds of things. But the reality is, is we're emotional beings. So much of this is, you know, energy, motivation, positivity, the ability to see, you know, the, the next hurdle you want to jump over, all of those kinds of things and when that suffers, it's, it's really hard. I think at the end of the day we just needed to sort of pick ourselves up, dust ourselves off, sort of feel sorry for each other and ourselves for a couple of days and then realize you just got to keep going. There's really no other choice.

Had you broadly shared the deal internally?

No, but I.

Presumably your leadership team knew.

Exactly.

Yeah.

It was tough.

Yeah. You know, when I look back on Wave and my first exposure to it, which was your seed round, you know, my hesitation at the time was, was free.

Yeah.

It's like why Mark?

Why?

I'm way too conservative, you know. But pre sells.

Yep.

And the biggest challenge in SMB is customer acquisition cost. Right. It's a relatively infinite playground. It's like mathematically impossible to run out of tam, really. It's just how do you reach them?

Yeah.

But when I think back to that time, I think you were like way ahead of the curve and really innovating in terms of an offering that VCs were ready for. Right. Like, it feels like your company was more like a consumer company. And so I'm wondering if it was like I think you referenced. Yeah, in the seed, it was difficult to raise. Like, was that a lot of headwinds? And you know, did you think of yourself? You know, CRV is very strong in consumer. Did they bring kind of consumer instincts to you? Like, how did that all play out?

Yeah, it's interesting. I think, you know, a couple things come to mind as, as you talk about it. Like number one, I remember talking at one point to Alan Lau, the co founder of wattpad at one of the CEO groups that we had, and he was talking about the fact that, you know, when you're trying to raise money, especially in the sort of later rounds of call it, you know, abcd, whatever, rather than the seed round, you know, those, those venture capitalists are seeing so many different companies. The question is, is how do you stand out? And he talked about the fact and we all agreed, you know, it really takes one slide where you want them to sort of perk up right at the beginning of the meeting and go, wait a second, what, what did I just see? Because I don't usually see it. And so you've got my attention. And for us, you know, very, very early on, we were signing up probably at the time that we pitched CRV, we're signing up 500 small businesses a day and essentially for $0 CAC and that, you know, by the time we were raising our B, that was like 1200 a day. And I think it peaked at about 2,300 a day when we started, you know, doing some SEM, etc. And so, you know, I think, I think for founders who embrace the VC model and believe that their business, you know, needs venture capital and obviously you and I both know, probably too many people think that their model is VC backable or even would want to take that approach. But if you do, because you feel like you've got a model that, you know, takes capital to get to scale to work, etc. There's no better way than having something that sort of pops them up and go, yeah, like we could change the dynamics in this space by taking a different approach to customer acquisition. And that's really what we tried to do.

Yeah, you think about it, they pass on so many, right? So you just have to grab their attention. You know, when I was advising companies on late stage fundraisers, um, the way I distinguished early stage from late stage was like the early stage investment decision is ultimately A leap of faith, especially in the seed. The seed is just a bet on you. And James, in the case of wave A, there's some evidence, the thing that distinguishes B and the rest of the Alphabet from seed and A is there's no more leaps of faith. Like, it's just you figured out the recipe, you know, where to go to get customers, how long they stick around, how much they're worth, therefore how much you can pay for them. The whole pitch is basically, I figured out the recipe. I can make 10 sausages. If you give me your money, I can make a hundred. And each one tastes the same. And by the way, I've got the leadership team in place to deploy the capital to get to a hundred really great tasting sausages.

Yep.

And then the other thing I would suggest is ideally, you know, maybe not in 2012, but more recently, seed, nay, rounds tend to happen pretty quickly. There's a lot of FOMO momentum, but with bees and above, like those investors, they want to kind of have a triple on at least on every deal. And so the more time they have to track you, you know, if you walk in and be like, hey, I'm Kirk, I'm from wave. Here's what I'm planning to do next quarter. Three months later you come in. Yeah, yeah, that thing I said I was going to do, I did it, by the way, is what we're doing next quarter. And then you tell that you crush that and then by the time you do that, you're like, top of the pile. Couple that with your suggestion of just like that, wow, attention, slide, and I feel you've got a very successful fundraise on your hands.

Yeah, I think the one, the one place that is a little bit different than what you described, I think of what we experienced at wave, which was with our B even, and I think you and I would both agree, you know, as you mentioned, 2012, very different than now or even a couple years ago where, you know, with our B, I would say we sold still on the promise of, of what this huge community could bring. So we hadn't figured out monetization, but we had really figured out distribution. And the, the view was that when you had this many small businesses on the platform, when you had this much data, when you had this much right to get in their important flows through their financial data, that there was a way to monetize. But we, it took us a long time to figure that out.

I would argue you figured out the toughest thing, which is distribution.

Yeah, I would say, you know, the, the thing that it led to and the challenge that I referenced before about free was there were two challenges. The one is the obvious, which is, you know, you ultimately have to find a path to monetization. And we, we weren't even the typical sort of freemium of give part of it away and then charge for the rest. We were really free. And so, you know, something we got lucky on was fintech really became a thing right at the right time for us. And we were at the early stages of that, which, you know, one could never sort of dismiss just the idea of timing and luck and that kind of stuff. And fintech coming around and being a thing and us being at the forefront of that was really, really helpful timing. So the one is monetization, you know, is obviously challenging with something that's free. But the second, which was much more nuanced and I would say a much bigger fight over a longer period of time was the idea of churn and usage and product signal. And for us, that was really, really difficult. I mean, you know, this working, you know, within small businesses and, and back office tools is that small businesses owners hate doing it, put it off, you know, all of those kinds of things. And so we had a double whammy of we were in a space where, you know, small business owners didn't really want to be in there on an ongoing basis, you know, for the accounting side of it as well as it was free. So there was no signal that they had, you know, churned by removing their credit card or not paying anymore. It was really, really difficult to get the right product signals to, to understand, you know, know, which part of the funnel wasn't working. You know, those kinds of things became much, much more difficult than I think they needed to be. And I would say that held us.

Back a lot with free. With that amount of inbound funnel, separating the signal from the noise would have been difficult. Right. If you, if you're an enterprise SaaS company and you sell to Fortune 500, well, you got a TAM of 500. Your actual customer counts a lot more. There's no noise. Right. You just totally versus having 2,300 new customers sign up every week.

Yeah, I would say every day.

I say every day. Exactly. Every day.

This really makes. Your point is that we got really, really good at the upper funnel optimization because we had so much traffic to play with and test against, you know, those first steps of onboarding. I mean, we could, we could really, really sort of nail those initial touch points to try and maximize conversion and then Down Funnel. From that, it became so much more difficult. And so we ended up spending a lot of time up Funnel, which has value. But I would just say, you know, I, I will always look back on my time at Wave with, with some level of regret. We didn't take the oxygen out of the space like I think we could have if we would have executed better on the product.

You know, when you told me about Xero wanting to buy you, it made me think about Intuit buying Mint. And at the time, Intuit's largest line of business was the personal accounting thing. Right. Which they subsequently sold. Quicken.

Yep.

Yeah, Quicken. Thank you. I think Mint actually didn't really work as a standalone business, but it was threatening to their single largest line of business. So is that the kind of impact you were looking for? Really? It's just like to really threaten the zeros and Intuits?

Yeah, I mean, I think, I think we did threaten the zeros. I think there was a small time. I mean, I was with Brad Smith, who was the CEO of Intuit at the time, and he gave us a huge compliment, which was that he felt like we at the particular time had the best UI and UX in the space. And I think the model threatened them a lot. But I think what we were able to do with it for a variety of different reasons in terms of, you know, amount of funding, talent level in Canada at that particular time. And, but, but none of this is an excuse. I mean, at the end of the day, Shopify has overcome all of these things. And so ultimately that's why I have regret is because, you know, the buck stops with me. And I think we, we had an opportunity, the outcome was great, the journey was incredible, all of those kinds of things. I think we did a lot of things for a lot of small business, but I just think the, the potential of what we could have delivered for small business owners, at the end of the day, we could have done more.

You're being hard on yourself because you deliver a pretty serious outcome and you served a lot of customers. But I think that's also right out of central casting for an entrepreneur to be hard on themselves. So I get it.

I mean, I think all of us are in this to try and do something big. Right. And yes, 100% and have an impact.

So, you know, you look at the biggest outcomes in venture world, they tend to be founder led, start to finish. So 100% correlation between your performance and the outcome of the company.

Yeah.

Looking back, like, what did you do to make sure you grew faster than the company. I know, like mentors like Peter Koresha, who's a very important figure in your life, and we'll talk about that. You know, that was him. But, like, were there other things? You know, what. What did you turn to to make sure you grew faster than the business?

Probably the biggest unlock for me. I mean, you mentioned it, like, all the way along. We worked with some amazing people, and I've had incredible mentors along the journey of my life, which I've been lucky about, and relied on some of them through the journey. I would say one of the biggest unlocks for me was when Ashira joined the company in 2015, you know, through the work that she did and the introduction to actually her father's firm that did a lot of exec coaching and training. I think the biggest unlock for me was her helping me lean into my strengths and stop worrying as much as I was about the areas of weakness. That's number one. And number two, one was I felt a lot of guilt in the early days when I knew in my gut that we needed to make, you know, a change in the people in the organization at different levels. And I had to come to a lot more peace around listening to my intuition, having direct conversations, and then, you know, where necessary, making a change. And I think those two things were the biggest unlocks for me and. And led to, quite frankly, everything else that was related to my own growth. I think freeing yourself up from that feeling of, who am I to make this judgment when I've made tons of mistakes along the way and being okay with the fact that I'm going to try and be honest, be real, be authentic, be sensitive, but not overly so. Make sure that I'm being candid in all of the conversation so that we know exactly where we stand and what we need to do in order to get to where we need to go. But then if that doesn't happen, being okay with just making a change. And, man, I had a hard time with that. And I. I still don't naturally find it super easy, but it was the biggest unlock by far. Everything about this journey, as you well know, is about the people you surround yourself with, the talent in the company, their own feeling of empowerment and inspiration and those kinds of things. And it, you know, if you're not constantly just driving for continued improvement across the company, it's just not going to happen.

Yeah, 100%. You know, the most successful founder that you and I know is Toby from Shopify. And his mantra from the earliest days is how do I get 1% better every day? Which sounds like, you know, a cheesy saying in a poster because for most companies they don't operate operationalize it. But he did. He would go home and replay his day every day and be like, oh, I don't like how I behaved in this meeting. We took the wrong decision. He would course correct either that evening or the very next day, he'd go through an explicit learning and improvement loop.

I've been reflecting on, on something related to what I've seen from Shopify. So you know, at the beginning of this year, let's say as an example, they, they made a big announcement around wiping people's calendars and this kind of stuff and, or this new calendar plug in that they have that talks about how much the meeting is costing, etc. And I've been reflecting on that because you know, in the last. So I was on a, I stayed for Wave at Wave for three years after the acquisition and you know, for the people, for Jeff and the folks at H and R Block, for my own sanity and feeling of authenticity, I really tried to, to give those three years the best that I could. But obviously near the end, you know, your mind is just starting to wander and you're thinking about other things and you can't help but see the finish line. And it's difficult and it's, it's difficult when you're wired and have acted in a certain way that at least I think I did for 10 or 11 years of like, you know, pedal to the floor and we gotta go, go, go. What I found during that time, and I can be, I could be delusional but I'm, I'm pretty sure is that as I took my foot off the gas, everything kind of slowed a little bit or there, you know, decisions took longer or there were more meetings to, you know, decide something or you know, blah blah, blah. And so I've been reflecting on, you know, the, the Toby example and the meeting, you know, killing the calendar invites as an example of, you know, they are still in that mode all this time later and all this success later of like we are not going to let that slippery slope slide into the company of you know, the foot not being on the gas. And I have so much respect for that. And I think that's why, you know, founder led companies do better than not because you know, they're just. That foot on the gas is so important.

I spent a brief time there as their, their first CFO on a part time basis and you know, I came in cpa, Virgo. I see the world as black and white. They asked me to come in because I had, you know, best practices. I had experience. But, you know, Toby was viscerally anti. Actually best practice. You had to prove to him on a first principles basis why something should be done. You know, he questioned everything. And, and I think that's part of, you know, that observation that you just made. It's not just, well, here's what Harvard Business Review says to do for a company with 10,000 people, like everything, every decision is arrived at using first principles, you know, and therefore stands on its own merit.

Like, kudos for, for the, you know, I don't. No one sort of understands what it's like for him in that role and others like him to keep your foot on the gas for as long as they have and just to keep that standard really, really high all the time.

Yeah, it'd be so easy to just totally chill out.

Absolutely. He's a billionaire, loves to kite surf. He could be.

Maybe I'll get an island next to Richard Branson's and I'll just chill out. Like, who could fault, right? I'll bet he works harder than he's ever worked.

I bet that's true.

Going back to your retro on yourself, you brought up two really important concepts. One is this notion of superpower, and the other is, you know, the importance of making the hard decisions. When I do, when I onboard new CEOs for coaching, I have a little form that they fill out where they rate different aspects of their personal life and their business from very unsatisfied to very satisfied. But I ask them explicitly, what is your superpower? I ask about the superpower because first of all, in a utopian world, every person in a company would be doing the thing that they're uniquely capable of where they're in flow. It doesn't feel like work. I think that's hard to do as a company grows. But at the very least, the company should be designed around the superpowers of the CEO. And then management teams should be built around said superpowers. Right. So you've got kryptonite in one area, you've got a right hand for whom that is their superpower. So I really love that you had that insight. I'm going to come back to that in a second and ask you if you're thinking about that for your new company, but let's park that for the moment and then on the hard decisions. You know, I've let lots of people go over the years, always, in retrospect, did it too late. You know, realized afterwards that nobody wants to do a bad job. We're all what Peter Drucker calls knowledge workers, right? We are. We are the product that the company hires. And we know when we're not crushing it. You know, so it's actually humanitarian. It's compassionate. It's compassionate for the person. It's compassionate for all the other stakeholders. Right. For the other employees. You know, often you let go of, like, a department leader as an example. People in that department knew it, and they're like, finally you took action, right?

So, yeah, I think you're right in terms of, um, you know, it is the compassionate thing, provided you've done the work ahead of time to be as candidate and as clear about the why, the what, the how, all of those kinds of things. And I think, you know, part of my issue was that I was skating around that versus having those conversations and being as honest and candid as I needed to be, such that they had the opportunity, if they so choose and so chose and if their skills lined up with it, to be able to do the job that was now better defined. And I think. I think that's part of the journey, too, is I have a tendency, you know, to. To let it fester and to feel it in my gut, but not express it as clearly as I need to be. And so, you know, that's the. That's the road. And the journey that I've been on is trying to be better about that, such that, you know, we both can be honest about where things are at, what the path forward is, and then ultimately, if not that, it never comes as a surprise. And it. And it's probably, you know, within the compassionate place that you're saying, where it's like, just. You've got a ton of skills that just don't line up with what we need right now. Go put them to use such that you feel better about it. I think I will say one last thing on this, which is like, I. I have seen people come into wave and. And keys not old enough yet for it to have happened here, where when they left, they weren't as strong as when they came in. And that always bothered me because we had that impact on them and we needed to do better about, you know, either playing to their strengths or, you know, not leaving them in an uncertain place for a period of time. Like, that visual with me is like the worst possible thing. And so, you know, I think that really helped cement that I needed to be better at expressing those things, such that those people never were in that limbo where they felt uncertain.

Yeah, I love that you said that. I mean, I, I think they own a fair amount of agency in that issue. It's not just on you. But, you know, maybe again, I come back to Shopify here. You know, Shopify created a coaching culture, right. Initially started with, you know, this guy was coaching Toby, then he started coaching some of the leaders. Then they brought him in house and they created a coaching function. And so I think eventually everyone at a certain level and up got access to that. So there was some system in place to help people grow. That's just one example. So I like, I'd love to switch gears and maybe talk about boundaries for a moment. Right. You've just celebrated your 20 year anniversary. You have three children. How did you navigate being a husband, a father, a son, a brother, if you have siblings? Like, how did a friend, you know, how did you navigate all of this, all of those hats? Or did you. Or was it just everything was deferred and it was all about wave?

Yeah, it's really good question. I think one of the reasons why I've been married for 20 years is because my wife was amazing at sort of reminding me, you know, what was important and that, you know, it was unacceptable not to be present. And, you know, in, in a way that wasn't, you know, condescending or, you know, challenging or that kind of stuff, but just in a loving way of like, listen, you know, you're never going to get this time back with the kids at this age or, you know, with your friends or any of that kind of stuff. So I think I would just say for me, I think there were just, there were, there were periods, right? And I think we got to be okay with those ups and downs, like when we were in heavy fundraising mode or, you know, 2015, we're about to run out of money or that kind of stuff. Like, it's, it's all hands on deck and it's, it's, it's like my feeling was I'm gonna go down with the ship if it goes down, but I'm gonna do absolutely everything possible to keep it afloat. And, but that lasts for a period of time. And then when you come out of that and things stabilize, thankfully, you make sure that you've got a great team around you. Then, you know, you leave at 3 o' clock if you need to go see a basketball game or, you know, go do this or go do that. Um, I think it's just really, really important. And I, I do think that. And I've talked to many founders about this because I've seen both sides of this from other people I know is that like, you gotta be on the same page with, with your, your partner. And I think, you know, I know a lot about my wife. She knows a lot about me, and I know what drives her happiness. And she knows that for me, this drives my happiness. Like, this is my happy spot. And this is what I need to do to be at my best is like, be in these high pressure, amazing situations. Like, and we have to embrace that about our partners.

Right.

And sort of understand what makes them tick. If we're trying to take that away, that's not going to work either. So I just think it's a balance. And then one last thing about this is we really. Because generally wave was skewed a little bit older because James and I were both older and had kids. And like, we tried to involve families and like, spouses came to all of our holiday parties until we got to a certain size. We would have events where kids would come into the office and that kind of stuff. Like, I think it's really important to, you know, my kids kind of felt a little bit of the journey. We'd go into the office on Saturdays because there was like an arcade there and they could see the office. And yeah, it just, I think, I think you got to bring these two worlds together. They're not, they're not separate. It's who we are.

Yeah, I love that. Well, culture starts from the top, right? So you made that a cultural norm. So I really love it.

Thanks.

Maybe I'll come back to the exit because it's such an important moment and, you know, there was one exit that nearly happened and maybe more defensive circumstances with Z0. Just tell us, I guess, a little bit about how you arrived at a decision to sell to, to H and R Block.

You know, all, all kudos to the board and to my co founder, James, because they were kind enough. And you referenced this earlier like, I think it's smart also for, for boards and VCs to do this. Is, is they basically, they basically said to me, you know, it's, it's your decision. If you want to keep going, let's keep going. We were in the middle of a, a successful fundraise. Not one that was maybe as easy as I was hoping for, but, you know, a successful fundraise. And then this offer came in and so we did have options, as you know, and Would, would have created for your clients and really counseled your founders to do like there's nothing like having options in order to, you know, make the price go higher or the terms be better. And so, you know, in our case, the, the successful fundraise led to dynamics that pushed the deal to go faster and you know, with better terms and all of those kinds of things. So that's a real thing. We felt it, it was powerful as a force that could help drive to a decision ultimately. Mark, you know, so much of this is just your gut feeling, right? Like I think there were pros and cons on both sides, but, you know, it had been a long ten years or nine at the time. As we discussed lots of ups and downs. The business felt good, but not great. The, the team of Jeff and Tony at H and R Block were amazing to work with. So it felt like it was a good cultural fit. They wanted to leave us alone and have us continue to, to grow, which was amazing opportunity. The price seemed fair. And so to me I just kind of looked at it and thought that this feels like the best outcome right now.

Amazing. Yeah, it's not a thing you can a B test, right?

It's really, really hard. I will tell you. I remember. So we had just gone. As we were going into that fundraise, we had gone through a process where we had built a sort of vision platform for the company to see about what we thought was possible over the next five years in the business. And I had presented that to the executive team to get them in, you know, hopefully inspired about what I thought was possible. They really like pushed me to share it with the entire company. I was kind of like, oh, I don't know, it seems a little bit kind of out there. And they were like, no, everybody should see this. I showed it to the entire company. They felt really, really jazzed about it in a way that honestly surprised me. And then I don't know how many months later, I remember calling the town hall to announce that the sale had happened. And I was walking down. So I had, I have the pleasure of, you know, living 10 blocks from, from the office. And so, you know, the, the H and R Block was going to announce it before, you know, the market opened at 8:30 or something like that. So we had to call Everybody in for 8 o' clock to tell them before the market announcement went out. I remember walking down, you know, Logan Avenue at 7:30 in the morning and I don't think I've ever been more scared, more nervous, more feeling of inauthenticity that I was going to go tell the company that I decided to sell the company, you know, right after sort of inspiring them hopefully with this, with this vision. And you know, I was amazed by the reaction by the team. Everybody was super excited about it, etc. But it, but that's the kind of journey it is when you're going through this, right? There's you want to think, oh, I climbed to the top of the mountain, we did it together, we got there, it's a great outcome for everybody, etc. But it's filled with a lot more anxiety and, and concern and drama than that.

Yeah, for sure. What a moment. Geez, I'll bet. Actually. So optionality is huge, right? Puts you in offense, not defense. But I'll actually bet that that five year vision exercise was actually really important in the sale because 100% of the value for the buyer is created post closing, whereas for the seller it's all pre.

Yeah, you're right.

Being able to actually clearly articulate and be genuinely excited about all of this future potential, I actually think is so important to getting the buyer.

You know, it's interesting.

I really think it was.

They never sort of put that one and one together, but I, I think it's absolutely right. I mean we were in that space where they could pick up on, you know, feeling excited about what, what's coming and what's possible and that kind of stuff. And you're 100, right?

Well, maybe let's switch gears as we kind of start to wind down. So you're now you've gone from a really big exit, to be honest. We hear about giant exits, but they're actually statistically far rarer than most people believe. You sold wave for 400 million US and now you're right back to the beginning, maybe. Tell us, how did that happen? Origin story? Is it easier second time around? Is it weird because you're used to having staff and resources? What's that journey like?

I would say first of all, when I left wave, we were 375 people. We're now at key, you know, nine. And I'm just, I'm just absolutely loving it, you know, the. So much of the world, you know, in those 375, you know, waivers, time period of call it 2022 at the time is, you know, vision, setting and making sure everyone's aligned. And you know, we were going through, you know, the tail end of COVID and remote and, and a very different talent market than today. And so like just for a lot of Reasons getting back into this size and being able to work with like a key handful of people and you know, alignment is much, much faster and quicker. Iteration is much faster and quicker. You know, all of those kinds of things is just, has just been really, really rewarding and energizing. That said, I think the down, the negative of it is being back at the pre market fit stage and I, I kind of forget, forgot what that was like. I mean we always kind of knew what we were building at Wave and we're pretty committed and James had a really rock solid view of what he wanted to create, etc. And so being back at the, you know, inspired by decentralized identity and what it can create but not sureing how to get that product to market has been humbling because you know, as, you know you, you think, oh well this is a good idea and then you test it out with a bunch of users and you're like, ah, they're not really all that inspired by that. And so the iterations that we've gone through over the last year have been, you know, ups and downs. That said, you know, I was just saying to my wife today, like we're on the cusp of launching a new product when this podcast drops, we'll be out in market and, and people could see it and you know, right now it's just everybody is working, you know, really hard to bring this thing to life across engineering and product and design and marketing and you know, social and you know, all these different channels and it's just like so fun to be at that stage and feel that excitement and that energy and before you launch it's always fun because you think, oh, this thing's going to be great and we haven't been punched in the face.

Yet, so nothing but possibility.

So it's been fun.

Yeah. And you know, as I thought about it, based on the very little that I knew about it, it feels like there's so many directions you could go, which is good and bad.

Exactly right. And you know, a big kind of chicken and egg problem, right. Of you need the customers to adopt in order to get the third party products and services to use, you know, you to unlock value faster. But without those third party products and services, you don't necessarily, necessarily have the customers. And so, you know, we've really, people in this space in decentralized identity in general have really struggled over the last five to seven years. The idea that, and as you described it, you know, what you can see it doing is right there in front of all of us. It's a question of how do you bring it to market. We think we've got a good idea now and we, we hope we're right.

I can't wait to see how it all unfolds. Feel like it'll be another multi year journey.

Oh, no, that's not what I was planning for.

Well, well, you know, good things do.

You're absolutely right, they do.

That's how it works. You know, it's not every day that Instagram, you know, the Instagram sale for a billion dollars when you're actually probably a similar headcount to you now, that just doesn't happen all that much.

One can hope though, right? Right, Mark, don't crush my dream.

Yeah, sorry, sorry. You're absolutely right. You're absolutely right. Well, Kirk, this has been a true pleasure. You know, you're one of the good guys and so I'm super thrilled actually that the first show I got to record was with you. Thank you so much for making the time.

I really appreciate it, Mark. It's always a pleasure. And yeah, going back to those days, I remember meeting you, you know, from real and pitching you and thinking, oh my God, Mark McLeod's gonna listen to my, my pitch and this is gonna be so exciting. And you gave really great feedback and all of those kinds of things. And so to be here, you know, whatever, 13, 14 years later is a, is kind of karma and I love it. That's awesome.

It's funny. So you brought up Wattpad. You and Wattpad are, are in my anti portfolio Mrs. That turned out to be really big exits. So lesson learned. I guess that's why they call it venture. It's not, it's not obvious. Well, thank you again for making the time, Kirk. I really, really enjoyed this bit of pleasure. Thank you so much, Kirk.

Thank you.

Hey, thanks for listening to the Startup CEO show. If you'd like to connect with me, be sure to visit my website at Mark McLeod me or follow me on LinkedIn at the Mark McLeod or Twitter @markmcloud. And if you want to tune in again next week, be sure to subscribe on YouTube, Spotify, Apple, or wherever you get your podcasts. We'll see you next time.