Recently: Selling ClassOwl In 30 Days | Sam Purtill

So I can tell you guys about ClassHound, how we sold the company. Do you think that'd be interesting? Yeah. OK. I could always tell you other stories. OK, cool. So I'm very— I started programming when I was 12, I think. So I'm very just like— I like to think like a computer and like to think in processes. With the Class Owl acquisition, I guess I can take you back to before it happened, the decision to actually do it. We had started this company our sophomore year. We had done a ton of things that were working, but we had gotten to the point on the team where we couldn't figure out how to scale the business. We couldn't figure out actually how to make money from this product that we had built. And we could have gone— schools were offering us some money to use it, but it wasn't enough for us to build a long-term sustainable business. So I think we had 3 months of cash left, and the idea was we were either going to completely pivot and work on a totally new idea, or we were going to just try to sell the company. So basically the decision that we made was we were going to try to sell the company. And we felt like that was better for our investors and better for us in terms of the long term than trying to go out and raise a bridge round and pivot the company. It would have been a total nightmare. So, the first thing that we did was just we asked people for advice. Like, this was one of those moments where we were just like, everything's okay now, but like day, like, I don't know, 4 months before this happened, like, I was so down. Like, I remember I had like a breakdown and like I was crying and stuff, and I thought that like everything was all over and we were gonna run out of money and go bankrupt and everything. So I was kinda at like the rock bottom, and at that point I just like, I knew I had to go out and like reach out to all these people that I knew and just ask them for help. And I think after doing that, after having that experience and hitting rock bottom and going out and talking to all these people and being super frank with where we were in terms of the company, that helped teach me that people always want to help you. Not a single person we went to and told them the story of what was going on, not a single one turned us down, and they were all very willing to help us. So I think I learned from that that everyone wanted to help us, and ask for help very early on. Ask for it early on and ask for it often. I went to every investor, advisor, mentor, friend. I went to all these people and just called them, had meetings. And I was very frank, very open. And some of these guys, they actually introduced me to other people that had been in my shoes. So I got introduced to, in the middle of this guy, in the middle, there's this guy I got introduced to at Facebook who's a very high-up product manager. And he had also been in a similar situation with one of his companies. And then I think I also got introduced to a guy that's now pretty high up at Uber. And so I got hour-long meetings with each of them. And they walked me through the process of everything that they went through and everything that they learned. And that's what, basically, that became the blueprint for my plan of execution. So I think the lesson for that is a lot of the stuff that you're going to do, it'll be the first time you do it. You generally don't know how to do a lot of these things. I think as long as you have a lot of smart people around you that you can go and you feel comfortable asking them for advice, that's the number one most helpful thing that you can do, because that's a huge shortcut to getting to where you want. So, both of those guys, yeah, they basically built the blueprint for what we were going to do. So, we came up with a strategy. We compiled the strategy. Compiled everything that we learned from the people advising us. And we basically gave ourselves, we wanted to do this on a super tight timeline. Because we knew that like if we didn't do it on a timeline, companies were just going to be like, OK, we'll talk to you guys in a month or whatever. So we told every company we went to that, I think it was June 15th is our final deadline. We need to know by this date. If you can't tell us by this date, we don't want to talk to you. And so that quickly weeded out all the companies that weren't super interested and the ones that actually were. And the idea was first the team came together and we decided where we wanted to work. So we said only SF, Bay Area, and New York were the only 2 places that we wanted to live. And then we basically came up with a list of every single company that we would ever want to work for. And once we did that, then we worked on getting intros to all the companies, trying to see if there was any exit opportunities available. And then after a bunch of different things, we would try to sell the company. So, I think the lesson, I mean, I'd say I was very surprised at how much we were able to accomplish in 30 days. And I think if you can bring your whole team together on projects, not necessarily just selling the company, but just have everyone responsible for certain parts of the project, you can get way more done than you think, as long as you have a very tight deadline with very clear goals. And our goal was extremely clear. It was like, we're going to sell the company or not. So I think that definitely helped. The next one was the process. So the process that we ran was get intros to as many companies as possible. See if they're interested in acquiring us. Meet them for the social fit. So we needed to meet all the people that we'd be potentially working with. They would also meet us, our whole team. So I guess at the time there was 5 people that were in Romania on our team. And there were 4 people in the US. And so we took the Romanian team and actually we found another company for them to go work for. Because we talked to all these companies in the US and they were saying, we want to talk to you guys locally, but we can't bring on a team that's outsourced. It was just too hard for them to absorb. So, we made a decision early on to split the team off into 2. So, it was just the 4 of us that I'm talking about in the Bay Area. So, the lesson that I learned from the process part is build sales funnels. So, this is, I took a screenshot. This is not the actual one, but this was the idea of what we had. So, we would put a list of all the companies we were interested in. then the stage that we were at with them. I think we had stages 1 through 7 or something, and negative 1 means it was a rejection. And then the final stage that we were at with them, something like that. So this was super helpful in just sort of managing the whole process. I would highly recommend— yeah? You put companies there that they're not in the education field. Were you just— Yeah, we just put down any company that we'd ever Yeah, it was just— so for us, it was like there was 2 things. So there was the opportunity to sell both the assets and the team, which is like a full-on acquisition. What we decided to do early on was just to do the acquihire, which is the company acquires our team. Yeah. So once you do acquihire, then you can open it up to any company. Whereas acquisition would have only been education companies that would have been interested. So, we actually— so, the other thing that we did actually, which actually literally closes today, is we've sold the assets off to another company that's based in Texas. So, we actually did 2 separate transactions when we were selling this thing. The first one that we did was we sold the team, and that was really time intensive. Or there is a deadline for that because the headcount just costs so much money. You need to sell that off first. But then the assets have a shelf life of 12 to 18 months. So you can sell those off later once the team is sold. You were 4 of you? There was 4 of us, yeah. So then there was just the execution. So that was the 30 days of actually doing this. So I would say the strategy and process were the 2 most important things. Once we got those 2 things nailed down, it was just purely like, okay, we got to get intros to as many companies as possible. We have to get them into the funnel. We have to see who's interested. And then we just refine the funnel quickly, as quickly as possible. And it basically turned out we had 42 companies that were in our funnel. We tried to get intros to all of them. We actually got intros to all of them. 4 of them never replied to us. 26 ended after the initial contact. So we would talk to them on the phone or in person, and they would be like, you guys are cool, but we don't have any room for you on our team right now. 5 ended after the social fit meeting, meaning either they didn't like us or we didn't like them. 4 ended after technical interviews, meaning that we went through the interview, we went through the real interview process, and it didn't— either we didn't like it or they didn't like it. And then 3 offers were made, and then we finally accepted one for Branch Metrics in Palo Alto. So I was at Branch for 6 months, and I was an evangelist there, basically working on— working there after the acquisition happened. But then I left and I joined Jive because I wanted to come back to San Francisco and be much earlier stage in a company. So, I would say the lesson was like our strategy, our process, and our sales funnel made this a very manageable process. I think this would have otherwise been like, it was very extremely stressful going through this. 'Cause there are so many moving pieces and so many variables that we couldn't control for. But I think having that stuff, like the early conversations with advisors and these really smart people, really helped us in like, actually the execution side of things. And I also, so after I wrote this blog post, I've had a ton of companies that are contacting me just asking for advice and stuff. So if you guys ever go through something similar, I'm always happy to chat and see if I can help. I'd say the main takeaway is first time doing this, ask for advice early and often. That's just in general. Startup advice. No one's gonna get mad at you for not knowing something when you're an entrepreneur. Give yourself aggressive deadlines. Sales funnels are great. And then execution becomes clear and manageable when strategy and process are set.