The Acquisition Process | Gerard Adams

I guess moving on from Elite Daily, can you talk about the acquisition process? That's probably a goal of a lot of the entrepreneurs in the audience. If you could give some insight into that process, I think that would be really helpful for aspiring company founders.

I mean, it was all a dream. I used to read Word Up magazine. I mean, I never would have thought that we would have gotten acquired as as quickly as we did. I mean, a lot of times it takes a lot more—

How many years was it?

It was the end of our 3rd year. This is our 4th year now, and 1st year being acquired. And I think it was, first of all, it was very strategic. I think building a great company, you definitely need to surround yourself, even as an individual, you know the saying, look, you never want to be the smartest person in the room. When you're building your company, you want to make sure you're surrounding yourself with great investors that believe in you, an amazing advisory board, as well as, obviously, your team. As we were building it, we knew we still had a lot to learn. So for us, we strove to have the right advisors in place and the right investors that can help get us to the next level. It wasn't too long before We saw Jon Steinberg. We looked at BuzzFeed. That was obviously a peer in the industry. He had left BuzzFeed at the time. And I happened to be at a Morgan Stanley speaking event. And I saw him there. I took a shot and talked to him at this event. And I went back to the office. And I was like, guys, this is an opportunity. We have to get somebody like Jon Steinberg involved that can advise us and has done this before. So that was the first—

And how do you pick those people? Why Jon Steinberg?

I mean, you look, you study your competitive landscape, you study the people that have done it, and you understand how they did it. But I think you need to kind of put together— I always tell when I invest into a company, what's your wish list? Who are the people that you look up to in the industry or have the knowledge that you you're looking out to, and then put that wish list together, and then see how you can creatively get in touch with those people and show them how you can provide value to them. If you do that, then they'll be open to getting involved and helping you.

Now you find yourself in that position now as an active investor. What do you look for in a company when people come to ask you, would you invest in us?

First and foremost— and I don't know if you wanted me to go and also talk more about the acquisition process at all too, so let me know if you do.

Well, let's go for the investor thing, and then we can talk more about acquisition.

For me, it's 100% first the team, the founders, the people, what they stand for. But not so much the what, actually, more the why. Why are they doing what they're doing? understanding the why, understanding their mindset, understanding that they are able to pivot and adapt, and understanding also what is their differentiator. What is different about them that's going to set them apart from the competitors? I also like to get involved in things that I genuinely, I also am interested in or I like. It's a problem that I'm looking to solve, or a product, service, or technology that I would use myself, and something that I can bring value to, something that I know I have a network that I can bring into the mix as well. But most importantly for me, it's the people, the founding team, and understanding what they're doing, how they're doing it, and why they're doing it.

And now, can you go back into the acquisition process? You found John Steinberg, and then what happened?

So we were able to get creatively in touch with him through one of our investors that happened to know Jon Steinberg. And we were able to get that meeting and showed him everything that we were building, invited him to the office, and had him meet the team and see the culture that we were building. And luckily, he was able to become that advisor. Because of that, and us communicating very well to him about our growth, it wasn't long before now when he joined Daily Mail, he saw this opportunity that Elite Daily can really help bring a US base of millennial market to the Daily Mail. The process itself of strategically finding somebody that can help get us to the next level, Obviously helped lead to an acquisition. But the most intense part of the journey for me was when it got down to making a decision if it's time to sell. Is it the right time? And that was crazy for me because we were at a point in time where, believe it or not, we didn't know if we were going to actually make payroll in a certain amount of time, like over 3 months. We were growing so fast. And we were in the middle of raising capital at the same time. So we're in this crazy place where we're flying everywhere. We're meeting with investors. We're looking to raise $5 million. We weren't necessarily getting the exact valuation that we were looking for. And then at the same time, we just entered into getting asked to give Daily Mail an exclusive for an acquisition. And we got to the last board meeting. I can go on and on about— all the decision-making, but the very last board meeting was really intense. I ended up making a speech about why I believed we shouldn't sell.

What did you say?

I thought that we were getting a valuation based upon revenue, and I felt we were just starting to scratch the surface. I felt that we weren't getting, compared to other valuations in the industry, we weren't getting the valuation we deserved based upon our users, our traffic, and the brand equity that we've built with Elite Daily. It wasn't just clicks. People knew Elite Daily. We knew firsthand, even just traveling, even overseas, people were like, oh, man, I read Elite Daily every day. I read it and embrace it and enjoy it. It was part of their lives, and we knew that there was a lot of brand equity as well. And I just felt that we still had a long way to go. This was kind of just the beginning. And now there was a reason why they were seeing the value in us. But we just hired our first internal salesperson at that point in time. We were really otherwise using a lot of agencies and middlemen. And then the team— My 2 co-founders, they still believed that Facebook was getting ready to change algorithms and that that would hurt us in a very big way. And it was very risky for us to stay the course. And it was important for everybody that we gave the security to the 65 people that were back in the office that believed in us. And we looked at it, we then ended up looking at it more as, is this the right company that would be more of a strategic partner for us that'll help Elite Daily become bigger than us? That will then give security to our team, help us scale, help us give the infrastructure for Elite Daily TV to live on for many, many, many years to come and become a well-known media entity that's bigger than any one of us. And there was a lot of variables in the marketplace that were risky. And I ended up pulling both my 2 other co-founders aside in another room and I said, guys, At that point in time, I had raised $5 million to have another offer on the table. I looked them in the eyes and I said, is this it? Is this the acquisition that we want to go forth with? They were like, man, this is our dream. We started this in an apartment. We started this as an idea, and look where we are right now. This is everything we could have ever dreamed of. Yeah, could we continue and go for more money, but at the end of the day, this is something that— It's a legacy. will forever be able to look back on. It won't— you know, we can— we'll always be able to continue. Elite Daily will always continue. We feel that this will give us the ability to scale and have the infrastructure. And I looked him back in the eyes and said, all right then, you know, let's do it. And looking back now, I think it was the right decision.

So did it end up being like a 2-to-1 vote in favor of the acquisition? Your 2 co-founders said yes, and you were kind of on the fence?

Yep. I was on the fence, believe it or not. I was almost a blocking vote, pretty much. And when I went back in there, we looked each other in the eyes. We went back in in front of all the investors. It was really cool because Alan Patrikoff himself was in the room, and this is such a small deal for him, but to have such a huge venture capitalist that was there, and we had a lot of support from Grey Croft. And we all voted, and then it became a unanimous vote from there. And at that point, it was emotional, celebrating, the whole team celebrating in the office. And it took a couple days for it to really hit me. It was a little bittersweet, because it was my baby. It was our baby. We believed in it so much. But we knew it was the right decision. And then the best feeling in the world was calling home. paying off my parents' mortgage and surprising my sisters, paying off their debt and taking care of the people that have always supported me my whole life was always the biggest motivator for me and the biggest dream for me. So to be able to do that, and then now take it to the next step, and I just launched my first nonprofit. I launched an incubator in Newark, New Jersey. So my family's roots are from Newark. You know, it's— and, you know, we don't have schools like this, you know, back home. So it was important for me to be a part of helping build the ecosystem in other cities that needed to educate other, you know, the youth that they can do it too. Thank you.