The 10-Point Checklist For When You Sell Your Company With Founder Collective's Dave Frankel

Just remember when you do have M and A discussions with companies, you're being bought to solve a problem. The problem might be a feature gap. The problem might be I got three years behind. The problem might be I'm going to miss the quarter. The problem might be there might be a positive problem, but I want to use leverage on my model to combine two companies. But you're like, the advantage to M and A is it's a quick fix to a problem, a flawed fit of an often flawed fix and hair on it. But like you can, an executive or CEO in a matter of weeks can solve a problem that otherwise would take years or maybe impossible to solve. So if you want to get acquired, be the solution. Like now, don't listen. Be the solution, listen and then figure out what problem you want to solve and sell yourself as the solution. Welcome everyone. We have a great session today. David Frankel, managing partner of Founder Collective. Founder Collective is probably one of the most jaw dropping successful seed funds that maybe has a slightly lower profile than folks that shout from the roof every day on social media. So we'll chat about that incredible companies from the trade desk to OLO to Coupang to like just. And I want to briefly talk about David, about investing, but the other day he wrote something on Twitter on a niche topic. It is a niche topic but it's so important to founders. And he wrote up his 10 point checklist on what to use when you sell your company. And I thought in all the years I've been doing this, it was the best thing I've seen on M and A on selling your company. The best thing. It is a topic that as founders you don't have to obsess about every hour. But I like his checklist so much I put together a saster post on it with my learnings because I wanted you to dust this off when you get that email, when you get that call. And I want everyone to know just enough about this to be smart. Right? And the reality is, look, we've had five IPOs in B2B since 2021. So if you're going to have an exit someday, it's probably going to be M and A. Yeah.

And Jason, thanks so much for noticing that post and for having me alongside you. I've been reading your stuff for years. Right? You're truly, you're a SaaS legend and there are very few VCs who for so many years have been like teachers, not bankers. And I count you amongst them. So it's a great pleasure to be here with you?

Yes. And tell us. Just. I'll tell you. Listen. I've been following the partners at Founder Collective since I started to get on social media. The deal that made my jaw fall off for founders was the trade desk. Though on this slide there's some. These are some good ones, right? We can talk about Uber and Coupang and all these, but the Trade desk from both a founder and a VC perspective is the gem we all dream of. Basically one and a half rounds led by you guys and both owning 20%. Harder to do today. Right? Harder to do today. And that was about all the company needed. I know it had a slightly rough quarter, but basically like 38 straight quarters of execution worth tens of billions of dollars today. That's in its, in its own way, it's like one of the greatest VC investments of all time, isn't it?

Yeah, it's. It is all credit to Eric Paley, my founding partner. And he's one of the most humble, brilliant people you've ever met. You, I think Eric. And it's. He stuck with it. Traders. We broke the rules. We, we wrote a significant initial check but then they were out of money and there was no money and like we were committed Fund one was a literally zero reserve fund. We were, there was no follow on zero like when we said we were seed and precede. That's exactly, that's it. And we had no choice. And rearview mirror, Eric, it's just mind blowing. Eric was on the board of the Trade desk till about, I think about a year and a half ago. Two years ago we owned roughly 12% in IPO. And frankly going into this topic, Trade desk is one of the reasons I think we're going to talk about selling companies. But the disclaimer is I hate selling. I hate selling anything.

Actually.

I look in the rearview mirror and I go, everything I've sold pretty much has been a mistake. So I'm a contrarian. I've been through enough sales processes to try to figure out what works and what doesn't if you're in that process. But Eric, I have the most amazing partners. Eric did Uber the Trade Desk and whoop, not on this, but our new spate, Micah did Verkada, which just got a huge valuation and is the winning company in that space. So obvious but so hard to execute between them and what Amanda's doing and Joe, I feel like the luckiest partner on the planet.

That's for sure. Pretty lucky. So I want to talk about M and A. But to frame the discussion and let's go through the 10 points that you made. You said something that I have in the last 18 months I've changed my mind on which is a little bit I've got or at least I would say like many things I've gotten more gray than black and white which is that all the ones that you sold you wish they didn't sell. Right. You've seen, and I'm going to assume the reason why is you saw that growth go later. Right. You saw part of the reason Saster was written is I had these regrets of selling. I sold the business at a million a month growing 100% with 110% NR. That was cash flow positive. You would never sell a business like that today. Right. And I saw it even while its market share decline still grow to 250 million, even neglected. Right. That's the power of recurring revenue. Right. From 12 to 2:50. But what I learned, I've learned a lot of lessons from the 2021 boom and I also learned some of them should have taken the offer.

Yeah, yeah.

Some of them should have taken the offer. Right.

Yeah, we've all got those right. I think market timing is incredibly difficult and just to your point, overcoming the initial inertia, making the mistakes, galvanizing a team and having this team where you trust each other and you believe in each other's competence and you keep on growing, it's very hard to get paid for that growth. And then even if your growth is kind of flattened out but you've got some kind of sight lines to the next inflection. To me, I often advise founders like take a three week break and if you need more, take two months, take a sabbatical, come back because so often folks are just too tired. They're tired or they're, I don't know, they're bored, they're not energized enough and it's just easy to stare down what you have and totally take it for granted.

Yeah, for sure. It used to be I, when I started the Sasters app I would track a lot of M and A back then and I found that so much M and A happened around year five because that's you start to get really tired after four years and then a decent offer comes in around five and it's enough like it's more sometimes it's more on an apps quietly on an absolute basis than you need as a founder. Forget about the VC side and a lot and in fact there is a very well known VC firm that a few years ago had a Practice to buy founders around five years. They actually went in tactically a multibillion dollar VC fund that kind of had a PE like element and they would try to buy out. And year five was their magic moment.

Because it's pe, it's fantastic PE fodder. Look, the obvious tactic, and we use this a lot, is just encourage the founders in particular, if it's a, if it's a particularly valuable round, is just take 10% off the table, right? Like risk yourself, take pressure off yourself. But I listen to you and I think in my very first business, in my early 20s, my partners and I were offered $5 million by Sprint to buy the business. So grateful we said no, Olo, PayPal offered to buy the business. PayPal came in and made $100 million offer and literally it was like Christmas. And that deal fell through. Noah and I were very disappointed. I remember the 29th of December, they offered to invest 5 million at 100 million. We took the money, we bought them out pre the ipo. But you look back and you go, the favors that were done to us, like when it's like these things fell through and we were left to continue to accrete and in these accretive growth situations, if nothing else, and it plays into our discussion, to be had now is think of that as an alternative. Think of like the worst alternative is you keep on growing and owning your fantastic business.

Yes, I think so. I think for what it's worth, let's get into your points. My only nuances today are one found and I just went through this with the founder that had a similar OLO type deal, much bigger, but just went through it and I asked him this, I said, I boiled it down to them, I said, listen, how badly do you want it? Because the IPO, I'm going to simplify. The IPO bar today is 50% growth at 500 million. Okay, now that's not a billion dollar IPO. That's a much bigger IPO. If you're all in on that, if you can smell it, if you can taste it, if you can feel it, say no. But if you're not sure, take the, take a couple of weeks to your point and maybe take the deal. If you. I know it's hard, that's just my nuance because the outcomes are bigger but the bar is higher. And I want you to want it, right? You got to want it. Because I just think in the other thing, in the age I believe in this recurring revenue, it's called saster. Right? But I think we're in an age now where AI is fueling so many competitors that if you don't want it badly enough, you're going to fall behind in a way you didn't used to. I believe you're going to fall behind. Right.

I think there's always that risk. But to. To one of your earlier points, we look at what founders want to do all day long.

Right.

And if our founders say we want to sell and we think those are really coherent and good reasons. Right. Like you have no choice. But often there is an investor on the cap table that's been there for a long time. And their model, it's like the tail wagging the dog here. Their model is they need to see some liquidity for the next fund. So there are often very problematic reasons in. Yeah, but that. But they get us to the point where if you're going to sell, then I think there is a checklist and I think there is a way of optimizing that.

Yeah. It was now wanting into the checklist. One of the many mistakes I made as a founder in M and A. And I think it would be. I don't know if it would be different today. I think it would be different today is I was scared of my VCs. My first startup, I had years of Runway. My second startup, we went cash flow positive at 5 million. So I wasn't scared of the VCs in the sense that I had to listen to their edicts, but I was scared they would block any M and A. I was scared that they would narrow my options. I was scared they would say no to everything. And it clouded my way of thinking about in ways it shouldn't have. Right. That there is this VC mantra that if the founders want to sell, you should sell. Right. And I think V founders should find out if it's true. Maybe they should ask if they're worried.

Yeah. And I think the different incentives play a lot. Right. Because I have this views. If you're growing and you just keep growing, really keep growing and see where this thing goes. But again, there are other timetables at play. And founders get tired. We've all been through it. Founders get really tired. And then they also have people around them, they have CFOs, they have saying it could be time you see that big check. And sometimes, like the mistake we make is we take pressure out of the system by giving the founders some kind of liquidity, but we don't think enough about the rest of the team. And then the team's playing on the Founders, even that growth, even that non stop growth comes at a price and you're lucky to have it. But I've seen most of the situations I've been in and I regret so many situations that I've sold in. Media Radar is a great example. New York based, one of the biggest media sales SaaS businesses. Todd Kreiselman is it got time for some of the investors and Bain. Scott Friend was in that with us and Bain had been in it for many years, had been very patient and at some point they're going, it's time. And I think that's where many VC funds, many investors don't have the ability structurally to go, I'm going to keep this going. So in a fund one or a fund two, we can do that all day long. Can say look, we provided a lot of liquidity to our LPs, they'll trust us in these situations. And frankly there have been situations where we've thought of, we've done it less than we thought of it, but is of just rolling with the next set of investors.

Yeah. Okay, so let's. This is the checklist again on Saster. I wrote up all of David's point and I added a few anecdotes on it on this post. Whenever you get into MA this 10 point checklist and we'll keep updating it, I would like it to be a canonical piece of content to help founders this first one. So let's go through them. But this one takes a while to understand buyer motivations, know what they're buying, do a little bit more of a deep dive here in practice. What have you seen?

Yeah, so I think you really do have to understand and it comes from listening and speaking and engaging with buyers and hopefully what you've had the opportunity to do is have those conversations before the moment where you say my company is for sale so you actually know what you're going to plug there. And I do think that if you have this luxury, you've got to tailor your pitch for those different buyers. An example could be Amazon Pillpack, where really I think what Amazon was ultimately interested in was the software system. We thought that the packaging, the robotic packaging and the delivery mechanism was like incredibly novel. And it was. But the reality was Amazon could replicate that and make it better in a heartbeat. That wasn't what they needed. But the spaghetti between the providers and the insurers and the PBMs, so the pharmacy benefit managers actually making that system coherent and making it work with multiple stakeholders, that was a huge software effort. And it is Amazon Pharmacy today. It's literally based on that pull pack code. And we always look at that as this was just an enabler. Right. Like the real business was like the what the consumer saw in the consumer packaging and messaging and we had to get that right. But that was what Amazon was interested in. So tailoring and understanding that makes a huge difference. In some cases you need to look at your people and go it's very difficult to put this team together. What they're actually doing is they're interested in us for an aqua hire. And these can be very expensive Apple hires. You look at like the Google character deal, right? Like off.

Off the charts. Yeah.

It's a, it's very difficult to put this group of 5, 6, 10, 20 people together. And that's what they're interested in understanding. That motivation I think is a step change. Right. Because you're, you then have the emotional intelligence to understand what's their willingness to pay, how aligned are we to if they're looking. This is a cheap Apple hire and we think we want this as a multiple of our revenues. We're totally mismatched. And I think that's how particularly in larger situations when you hire bankers, that's how you keep the bankers honest. And that sounds almost negative. That's how you work with the bankers, that's how you empower the bankers and that's how you become a kind of team that gets to the finish line. But understanding what each acquirer, because typically there are multiple acquirers. There could be people who value you from a fintech perspective, there could be people who value. From a SAS perspective, there could be companies who view their like their lineup as boring. Right. But understanding why they invested and what they're interested in matters. Right. So comes down to listening.

I think it's listening, asking and one little tell. I just was thinking live in the meetings I've been at, watch who they bring to the early meetings. If they drag a very technical leader. Right. It's a sign, right? It's a sign, right. If they bring a GM of the business unit or something, they're going to care about your revenue, Right. If they bring the CTO at your check, who they bring because they want us, they want to socialize the deal or get opinions or decide. Right. And when I looking back that extra person in the back of the room has been very telling on which are they, what they want to buy here. Right? Yeah.

And then some of it's. Sometimes it's more obvious than other times like really understanding the motivations of your buyer. What is your buyer trying to do? What is their thesis? How do you play into their thesis matters.

Yeah, a lot. I think the key takeaway here is align. Align the pitch to what? Which of these three they really want. And so often we. The short term revenue of the target is immaterial to the acquirer. What is Amazon doing in revenue today? It doesn't matter who they buy.

Yeah.

The further you are on the P spectrum, probably the more important revenue is. But whatever it is, you got to listen. It's often different than we think.

And even understanding, okay, so what are the buyers alternatives to you as a target? And could someone be a better fit? So understanding your dynamics and your desirability matters too. And that's by the way, that goes to trying to build something that is distinctive, that has a moat for all the reasons that you should build anyway. But certainly that stares you in the face when you're looking at M and A. Yeah.

This one's the next one. Share the story Fully commit to the process. Selling's highly distracting. Don't proceed unless you're all in. I do think you have to take baby steps to learn. Right. There is a line right. Where it's not that one meeting is not a huge distraction, is it? But share your learnings here. Yeah.

So just in fairness, this is size and this is size dependent. Right. Some of what I will say is when you've got a CEO that has a really good C suite that's built out and that CEO is, is not frontline selling and they've got a fantastic COO and cfo, then it's easier to commit to a process. Right. It's easy to spend time on the process. If you're in year three and you're still, it's still like founder led sales and you don't have your team built out as much, then the, then the cost of the distraction can be that much higher. But it's even like fundraising is. I see people taking one meeting and then one fund says they're interested, but you never had any other funds involved and that just takes on a life of its own. Any process, think hard about whether you want to go and if you do want to go, understand that it's going to take time. Some of the best fundraisers I've seen say I'm going to effectively take three weeks off my business and I'm going to raise this round M and A. You've put so much time and effort into building your company, into putting this team together. Energizing the team, you name it, every aspect of building. And yet you're gonna half ass your sales process. Like arguably one of the most important things in your life. And I see it done. So I think the fact is it's not just the founders that have to be fully committed and aligned and in agreement, but it's your top people. And there's a balancing act here between how many people know about it and leaks. But your top, arguably your cfo, your coo, your top people who are going to be involved in diligence, need to be committed, need to put time aside and need to drive that process. Otherwise you're doing yourself an enormous disservice. And these processes take tremendous time.

Yeah, this one I put up if folks want to watch. I interviewed Ben Chestnut at SAS Joan, right after they sold Mailchimp to 12 billion Intuit. There are actually a lot of learnings but one is they had a deal before that that fell apart and it almost destroyed the team. He said going to your point, it really resonated. Almost destroyed the team. They thought this deal was going to happen. It consumed a year and then the deal with Intuit took a full year. It took a full year. Right. To happen right from the beginning to end. So that's two years on this journey. And it was just burned into him how much that first one falling apart almost just wrecked the team. It was so distracting. And then it didn't happen. Smaller deals don't all. They can take two years actually one and one. But it's. It is. It was. This happens all the time versions of this.

There are many reasons also that are outside of the team that those fall apart. Many reasons. If you look at like the Amazon iRobot that was a regulatory reason last year that fell apart but wow. That, that has. It's not. Hasn't destroyed the company but wow, that has been a huge value loss situation with people leaving the. The drumming into the people who are involved in that sales process. Forget even creating competition. Our other alternative is we just say this was not time and we're going to continue to grow this business. You've got customers have to believe that as well. So you have to go. Look, we tried. We. We had some very interesting inbound. It was tough not to like take it seriously. And yeah we just figured out this was. It's really easier said than done this but I know it like the team gets so into it. It's just tough to pull out.

Another related point and let's hit the next one is brings up to your point is what you don't fully realize until you've been out on the other side. Until I was a VP at Adobe or saw a few times is unfully committed is almost every corporation even at the CEO level the priorities change every year. So you talked about deals falling apart for regulatory like o'. Brien. Another reason deals falls apart. The SVP leaves or is fired. That's actually a top reason for like sub billion dollar deals. Is the head of the business unit retires or is kicked out or is fired all of a sudden that's not on the it's not on his or her priority list. Even at the CEO it changes. It's. Even at the CEO it changes.

I so grok with that. I so drop with that. The we've seen that time and time again. The exactly the point actually the CEO like the CEO is being fired and the board knew about you. But what's wrong with me and in the rearview mirror you see the CEO is being fired or you go why were so we put up a satellite with Intel Set. This is in another lifetime. We own 25%. Intel set owns 75%. They just like the leadership who we thought were pretty great there. We dealt with the COO all the time. They just put the screws on this partnership all day long. And six months after you've exited you got what was going on there and they just said look, we had our new PE investors. The level of pressure that was being put on us on every single project and you don't know about that. So at some point you've got to remember that as well. Remember that there are facts and circumstances that are extraneous to your little deal, right in inverted commas your world right that you don't have a handle on. And maybe that in itself is a reason to say take a moment here and pull out.

Yeah, for sure. Can manage team expectations. We probably hit this one before. As simple as make manager. Don't let them start planning their new Tesla or beach homes or anything beyond that.

It's a bit of many a slip between the cup and the lip. Like this is a 3%. Like just because we're going into play doesn't mean we'll get it done. Doesn't mean we'll get it done now. And the default is you have a job at a company that is hopefully doing well Again, if you've got a company that is not doing well, that is not growing, that is not meeting your expectations, your funder's expectations, your market expectations, then you've got a different situation on your hands. And in the context of this conversation, I guess it's not fair not to mention that side of the spectrum, but over there, probably the expectation to manage is this is going to be very hard to sell. This is going to be very hard to sell other than as an acqui hire because we've taken a lot of money. We unfortunately we've made some mistakes and we don't deserve much more than that. So either way, being open and honest and aligned with your top stakeholders can save you a tremendous amount of time.

Yeah, for sure. I think looking back, one of the simplest things to do with the broader team is just to say, listen, we're doing this in large part to learn. Don't take it too seriously. Be 90% honest. Don't share these two things over here, but don't take it too seriously either. Odds that's happening are very low. We're here to learn. As long as there's a lot of truth in that, I think it's helpful messaging. Right.

I listened to that. I guess a little bit of my pushback is we hire bankers for $100 million exits. Yeah. I think they professionalize the process and it's good cop, bad cop and testimonial marketing about the business. Once you've hired a banker and you've committed it, like it gets tougher to say we're only here.

Once you've hired a banker, the process has. I want to hit that before on a time because I'm with you. For any deal even approaching 100 million, you should hire a banker. Right. You always pays for itself. Right? I think always. I found, and I don't want to do it out of order. There was one of my top 10 mistakes as a founder. If you don't hire a banker, even if they don't get you another offer, which they probably don't, even if they don't get you another deal, even if they don't negotiate better than you could, they take the pressure off of you as a founder so you don't have to be the bad guy. That alone makes you, everybody more money. Yeah. Someone's got to say, no, that's a bad deal. No, we don't want to do that term.

I would say I'm with you. It increases the chances of getting to the finish line. And sometimes it's. And everyone thinking of selling their company should look at this carefully. But James Kim at Catalyst had sold multiple businesses, or at least, I don't know, two or three businesses to Amazon and he has their trust and respect relationship with buyer matters as well. Like you're buying that as well. Your chances of getting the finish line are accelerated for sure.

Yeah. The only exception, I know we're out of order, but I think it's okay. The only exception I found to this banker rule, and I've written this so many times, Hire a bank. One of the earliest Astro posts. If you sell your company, hire a banker. Right. Huge mistake I made the second time. The one nuance I found over the years is when the CEOs know each other. Now you can push back on this. Right. But there are times when there is a deep level of trust between the two CEOs. And the CEO reaches out to someone they've known for years and says, david, I want to buy your startup. Okay. I know the last run was at 100, I'd like to do 150. And you say, no, Jason, it's got to be at least three times the last round, 300. And you get there right quickly is trust. I found folks bring in a banker into that and I've seen several deals fall apart because all of a sudden greed slips into a trust and it breaks the trust. I don't think it's going to break the $10 billion deal to change the company. But when the CEO doesn't have to do the deal, when they don't have to and they reach out to a friend and they muck it up, the friendship gets broke. I know these are business friendships, but I've seen this happen twice where the banker mucked up a CO2 CO deal. The only exception.

Yeah, look, what you're articulating is rare. It happens for sure. Someone was pursuing that company. Someone was strategically interested in the target for a very long time. And it's like unequivocal. And you get to an arrangement that works for both sides. I've definitely seen that even in that situation, some kind of intermediary to professionalize and get. It could be good lawyers. It could be like great lawyers on both sides, but particularly if the buyer has a successful and experienced M and A team. So again, this is size dependent. Then you're up against an M and A team that's been there, done that a lot. And you're doing your first rodeo to do that without. And I agree, it can be deal savvy lawyers professionalizing it is tougher. I have seen bankers and VCs generally help get that to the finish line for sure.

I'm with you. You need that leverage. I've Just seen the banker. I've seen this trust thing just get broken by bankers starting the process over again as their job. And the CEO being like, you know what, David, I got three other things to get done this quarter. Okay? Like I got AI, I got this. It's like you took something that I thought you could solve my problem by me buying your company. Now you're turning into part of the problem. Right. It's the one thing I'll say I want to get your other points is we did this deep dive with Brian Halligan a couple months ago on our podcast, founder of HubSpot. And we got into M and A unexpectedly. And the track we went down is founders way underestimate how big a deal it is for an acquirer. It's so much work. It's so distracting. It's years of commitment. Forget about the money. The money often doesn't matter. It really. We could talk about accounting for M and A, but up to a point, doesn't even matter. The accounting. Right. You can either defer it as goodwill or write it off for when your grandchildren are born. Right. It's the soft cost and the years of commitment that make M and A, like really risky for a lot of companies, right? VCs and founders. Don't even think about it this way. Thinking about it, if I had to distill some of this advice in a different way and let's talk about financial leverage. Just remember, when you do have M and A discussions with companies, you're being bought to solve a problem. The problem might be a feature gap. The problem might be I got three years behind. The problem might be I'm going to miss the quarter. The problem might be, it might be a positive problem. But I want to use. Use leverage on my model to combine two companies. But you're like, the advantage to M and A is it's a quick fix to a problem, a flawed fit, an often flawed fix and hair on it. But like you can, an executive or CEO in a matter of weeks can solve a problem that otherwise would take years or maybe impossible to solve. So if you want to get acquired, be the solution. Like now, don't listen. Be the solution. Listen and then figure out what problem you want to solve and sell yourself as the solution.

Yeah. And you're also back to build versus buy, Right? As a founder, my CTO would want to build everything right if it was everything. And he learned a lot of that the hard way. And I had a wonderful cto. They were such a fantastic partner. But we learned at the hard so who you pitch to matters. The CTO is like the build versus buy is ever present. Someone there is going, you know what, we could build it, but it's just going to take way, way too long. And meantime, we're losing market share to XYZ competitor. If you're pitching to the engineering team, typically they'll go. They will underestimate what you have built and go, we could build that in every single situation. So again, who you're pitching to, if you've got a banker, bankers tend to know this, but when you're trying to do it yourself, you're up against all of those acquirer team dynamics. Let us do this. You'll take us six months to build that.

Yeah. The only inside tip I'd add to that is when you hear from the company. When a potential buyer says build, buy or partner. Right. That's usually internal code word for we're thinking about buying, but we're not quite there yet. But we're pretty close. Like, they're not really thinking about build or partner. Or they'd be partnering. Or they would have already partnered with you or they'd be building. Right. It doesn't mean they want to buy you, but when you hear that, realize they've started, that it's somewhat serious. It's some. It may not be you, it may be someone else, but they're somewhat serious. Yeah.

Jason, I think we can move forward on this. Like, I agree massively with you. Like, you run out of money and you just run out of leverage.

Yes. Yeah. We hit the M and a banker. We had unanimous agreement on this. Right. If nothing else, negotiations, great. Prevent mistakes, but give you a buffer. You got to have this buffer. Right. Let's tie into the beginning there.

It's like, why would I. Why would. It's like just having a professional, having someone who does this all day long. So much experience has made so many mistakes. Like, why not have that?

Got to have it. You got to have it. And. Okay, but secure multiple bidders. I think this is maybe even more nuanced than it looks. Share your learnings here. Competition drives better terms. Aim for more suitors. What are your learnings here?

First thing that I find is you hire a banker and the banker kind of of says, the pitch is, here are six potential buyers. Like, you're meaningful to all of them. And then as time goes by, like, they nailed down and they go, three of those said, not interested at all. Two said, come back to us. Timing's not good. And a few months down the line, what you find you've got one. One buyer.

Yeah.

And I'd say that is a decision point because it's. Because if you carry on at that stage, right, like you have very little leverage at some point or another that buyer later on in the process. And again, we've seen this with financial sponsors. Their job is to know that they're the only buyer. Their job is to go back and go, this is not what you represented their job like. Particularly when you've got. It's a smaller acquisition, you've got junior people on this. There is a lot of extrinsic stuff going on where that person, like shaving money off the deal is looking better and better to their partners and to their associates. So there comes a decision there where I think, like the thing to do with the bank is to go, we're just not there. Pull out at this point. Now, again, your earlier point, you've got to have cash, you've got to have managed the process, you've got to manage your stakeholders. Because my even saying that to some people who've done this many times will sound like crazy. Go like you've committed to a process. You can't back out. That's when. What kind of company do you have? Do you have a company that is like running out of money and you have no choice here? Do you have a company that is like break even but everybody's lost their energy? Or do you actually have a company that's making some money, that is growing and you can afford to say, screw it, we'll come back from this will take us time. But lack of competition to me is hugely problematic.

All right, last one. Because we are up over time, which is fine, it's our show, but let it grow. I picked to Shopify and HubSpot both IPO'd at just under $1 billion. Right. Shopify today worth 143 billion. When I did this, HubSpot worth 38 billion. Right. Your point is. Keep going. If you have good metrics and good unit economics. But when do you know if you have a Shopify or HubSpot? It's ever. It's easy to bang your chest. When do you know?

And this is the rare air. But I with a huge hat tip to Eric, I look back at again at Uber trade desk in our portfolio. I was lucky enough to meet Bomb Kim as he dropped out of hbs. And there's so much of that. Rather be lucky than be smart. But if you'd said to me in that moment, coupang will be worth $60 billion at some point.

Yeah. Coupang's a great one. Yeah.

No. So the answer is it's a roller coaster all the way. And what you see situations where post ipo, you look at this and you go, wow. Like this feels pretty fully valued. Trade desk is like 25x or whatever it is. 20x since IPO, Coupang came out at a pretty hefty valuation in what it was like Q1, 20, 21. There was a lot of exuberance in the air then. And so you look at it, you look at these companies and there's moments in time where you go, this is very well valued.

Look.

The other problem as an investor is you see everybody else's bright shiny hood and you got. They're amazing what's going on under your hood. So you always kind of undervalue your situation because you just know all the tough stuff, particularly if you're a founder and you're dealing with all the problems. It's an easy way to undervalue. But I don't know, Jason, I think there is a moment where it's like, this is becoming very hard to compete with a trade desk today. Eric's not on the board. I'm still a shareholder, but we're not insiders.

Massive network effects there. Yeah.

Even post the correction like a trade desk is just a hard to start from the beginning. I remember a multi billionaire coming to me post selling the isp, coming to me and the team saying, let's start again. Right? Let's start it again. And I was like, give me half a billion dollars.

Right.

Because that's what it's going to take on the telcos right today. Otherwise I'm not starting this again.

But you.

So there's a moment when you're in the rarest of air. And even then, like I look at insider trading and I go, it's like the whole market thinks that they know now. They're clearly egregious issues with that. But a lot of the time the insiders are like they're high on their own BS as well. I don't know. You may have more wisdom and insight than I do on this. I think there is escape velocity at a point, but I think a lot of the time pre ipo, you're not entirely sure. And you always run the risk of that inflection that's just about to come. That customer that you worked on for five years that you don't know this is the positive side is about to say yes. Or that like product that everybody thought would be okay and just like hits pay dirt. That's the risk in selling.

It is. Yeah. I think if you have a great team and you're gaining share, maybe never sell. If you have a great team and are gaining share. If your team isn't great, be honest. There's a great team out there, especially today. And if you're losing share, you can gain it back later. But easier said, make sure you're committed to gaining share back. Because if your founders will see a decline in market share before VCs can see it, before anyone can see, you'll smell it. You'll go walk into that deal and you'll start losing deals, but you're still growing at 100 or 80 or 200. You'll smell it and it can be turned around, but only with a great team. I think a mediocre team can still ride a wave, but I think great team gaining market share, never sell. But those are the. Maybe we can wrap it. Those are my things to be honest about. Do you have a great team and are you gaining share?

Yeah.

All right. David, this was great. I know we went long. Thanks for everyone. We went a little out of order. I think we got our 10. And watch this. Read this and everything. When you go to sell your company, maybe go long, get a banker, be thoughtful, and have another offer. These are some of our big takeaways. But this was great. Thanks again for all the time.

Thanks so much. What fun. Thank you so much for following up and arranging this. Be well.