Bootstrapped and sold in 2 years – Business Podcast for Startups

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Andrew: hey there, freedom fighters. My name is Andrew Warner.

I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. Today. I’ve got John finder. He is a bootstrapper. Who created yet? Another email software company. I’m looking at your face to see that, to read you. It is there. How many email marketing companies have I talked to and still about two years ago now, has it been about two years?

Shawn: Yeah.

Andrew: You started another one fricking guy goes in under two years, sells his company after years of, of work. How good does it feel to have sold your business? To have a little bit of security, a lot actually in your life? Right.

Shawn: Uh, you know, a lot of security, uh, it’s, it’s a bit of a change. I’ve been an entrepreneur for eight years now. And, uh, with the acquisition, I, I am working for them for 18 months. So it’s different working for the man now, but, uh, really excited about the exit. Um, and I think the, the, it was the right strategic move for us, which is very important to me.

Andrew: All right. The company is called auto close. That’s close with a K auto close. It’s a revolutionary sales automation platform. I invited him here to talk about how we did it, and we could talk about it. Thanks to two phenomenal sponsors. The first, if you’re into sales automation at all, you need to know that you could do some of that on LinkedIn.

Zap dough. We’ll do it. If you want to see a video of how that’s done, go to mixergy.com/ . And second, if you need a hosting company, hostgator.com/mixergy is where you want to go. But I’ll talk about those later first. Sean, how much did you sell the business? Okay.

Shawn: Oh, I love let’s just say I’ll give you, it was a, it was about five times our ARR and, uh, we were, we were, we were doing, uh, North of, uh, North of 75.

Andrew: Wow. All right. So do you remember the day that you closed the deal?

Shawn: We did. We actually closed on September 30th and as of October 1st, I was working for vanilla soft.

Andrew: Was there the moment I remember talking to Barbara Corcoran and she said there was a moment when she went to the ATM and she actually saw more money in her account than she’d ever seen in her life. And she said, Now it’s real. Was there a, now it’s real. My life is going to be different moment for you.

Shawn: You know, it was, it was funny. So similarly I got it on now to get everything on apps. I went to my bank apps and it was like four o’clock on a Thursday. I was like, well, it looks like I’m buying a new host and truck this week. So real estate’s expensive. And I was like, okay, well, well, I went to my wife.

I’m like, let’s start looking at houses.

Andrew: And did you end up getting a house?

Shawn: No still looking. Um, um, we, uh, we, I mean, I have a few investment houses, but, uh, we’re still looking to actually this weekend, we’re going to see another five. We put some offers in, but, um, you’re in San Fran. We’re in Toronto. You know what the market’s like? Um, it’s not easy.

There’s eight offers for every house we’re going for us. So we’re fighting a, another fight every day.

Andrew: You know, I want to talk about how you did this, but give me a little preview. You told our producer, look, this was hard to build this up. What was. The hardest thing to miss out on because you had to reinvest money in the business or to see other people do that. You couldn’t because you’re an entrepreneur and you got obligations.

Okay.

Shawn: Yeah. So, you know, one of the biggest thing was, you know, looking at our competitors and seeing how they were scaling really, really quickly raising hundreds of millions of dollars. And here I was trying to compete with them and stealing business, but, you know, Every month, a month looking reconciling our, our, our cashflow, um, and growing it, you know, lean but profitable.

And those are the two things I wanted to do. Lean and profit. You want to have investors involved where I have to, uh, spend, spend, spend, and then either go, you know, hit the home run or we, we might be sunk. Um, so that was kind of where we did the lean and profitable, but it was tough to keep up with what our competitors were doing on a day-to-day basis.

Andrew: That this whole thing started 2014. You launched exchange leads. What is exchange leads?

Shawn: So exchange really just similar to the old jigsaw, which got acquired by Salesforce. It was a data company, strictly data and B to B data. Um, but you weren’t able to email the data. So we were just providing CSV files with the data. It was a subscription model. Um, but we just felt like we need to do something else because

Andrew: you go into that, what Jim saw did that was revolutionary was a, and a little sinister, but cool. Was they told us if we uploaded our own email addresses and contacts of the people who we do business with, which we know are accurate, they will then in return, give us credits where we could get that contact information, phone numbers, too.

Uh, mobile phone numbers of people we want to do business with. Right. So is it trade? Is that what you did?

Shawn: The exact same thing. We actually. Go ahead.

Andrew: no, you tell me

Shawn: I even spoke to Jim Fowler, the, in the, in Garfield who started jigsaw, we did the exact same thing, not at a scale like they did, but we did the same thing where you upload your context, pure uploading 10,000 contacts, or go into our pool. We give credits, you use those credits to download.

Now you’ve got double the credits. We double our credits. We’re both happy.

Andrew: But how did you build up the software involved in that? They were really, it was a good interaction that I had when I was on that site.

Shawn: Yeah. So we couldn’t scale at that amounts. We were bootstrapped at the beginning. So we, we initially had about, I think, four to 5 million contacts and then month over month as our clients grew and they kept uploading, uploading, it kept scaling. Um, but at the same time when they had their exit data was.

Yeah, a lot different than it is today. Now there’s so many different data players than there was 10 years ago where jigsaw was the person. So, um, we didn’t have a difficult time. We grew the business, but we just need to find out what was next. And that’s why we moved to the email from the data.

Andrew: How much work or how much money was involved in creating that one for one software that, that manager

Shawn: So funny enough, I was working the entire year. We had it developed and to build that software costs me about only $30,000.

Andrew: that’s not bad.

Shawn: Uh, it was, that was the first extremely cost, about 30,000 and the lead developer still, you know, still with me today. Um, good friend of my co-founder, but we spent 30,000, well, I was working VP of sales for a software company in Toronto, built it on the side.

And when we sold our first $49 deal platform was ready. I made the big jump.

Andrew: How did you know that there was a market for it?

Shawn: Are you? When I came up with the idea was when I was hired as the VP of sales on day two, we ended up getting a list, wiring money to some data company. The list was just terrible. And I said, well, listen, we have money. We’re spending good money and we’re not getting quality. Why not just build a platform that provides high quality.

Contacts. And I came up the idea literally on day two of my job went to my, my at the time now. Uh, well he was a time. He was a VP of tech there. Um, now co-founder of mine. Um, came up with the idea in Eastern Europe, got it done within about eight months, built the platform. And, uh, and as soon as I, I always had an entrepreneur at heart.

So even though I was having a six-figure job, secure job, pension, RSP, et cetera, I, uh, I made the leap to, uh, move the entrepreneur way and I never looked back.

Andrew: I have this sense that there’s a market for something like this. Now that’s maybe even simpler. I’ll give you an example. A lot of the entrepreneurs that I’ve interviewed or who I talk to even more. So the ones who I talked to who are building new businesses, they want to sell to businesses that had just raised money.

They want to know who in those businesses is making the decision for software because they just got money. They’re willing to spend it and they need to spend it fast. So imagine if you could get. And this would be maybe even be done by human beings, a search every month of who raised money and has been promoting it.

Then you use the infinite number of software. Now that will get email addresses off of LinkedIn, get the email addresses and the names of the people who are there as a decision makers. You’re not that many people there. Right? And then you put that together as a list that you sell for like 20 bucks a month at first or a hundred bucks a month.

And then you start creating these custom links. I see you listed. I see you smiling. What do you think of that as a business model?

Shawn: It’s funny. You say that because the founder of jigsaw. Jim started out with her and Alor actually helps you find who raised money. You get notification so you can use crunch, spacers out alert. You can scrape all those such. If I want to find exactly who raised money this week, you can get that day. You get any data.

And as you said, you can get an email.

Andrew: Network, but it’s a pain to do, right? Imagine we just give you here’s a CSV. File with all in fact, it doesn’t even have to be that, you know what it is, everyone’s using one of these smart spreadsheets software that used Gumroad to sell it smart spreadsheet, you start collecting customers and then you build it up and build it up and you do it on a subscription basis because every month there are new people who are raising money.

What do you make of that?

Shawn: Yeah, no, I think, I mean, listen, I think it’s like, it’s a great, I think people, you know, right now they want to know who their clients are at this time. They don’t want to have to search and go to these random, big databases. When, you know, I, you know, a company just got a series, a attack them like a pit bull because you know that they’re ready.

You know, they’re ready to spend money. Um, you don’t have to worry about the money being there. They raised 20 million. Well, they have money to spend 200, $500,000 on your subscription.

Andrew: The next thing I might want to do is do some kind of a search. This is just me brainstorming here with you. The next thing I might want to do is do some kind of a search for who just got hired at a startup at a at specific positions. You know, one of my, uh, past guests created, uh, I think it’s called Entelo it’s this, it started out a software that would tell companies when employees were ready to find a new job, because they were cleaning up their LinkedIn profile, which meant that they were trying to go out and get a job.

And that’s when you should be trying to hit them up. Right. So you could tell when somebody made a move even faster. Like, if there’s a new VP of sales at a company they’re willing to think about new software. They’re willing to think about new hires. That’s when, so you sell those lists, that list of people who’ve just transitioned to a new company with all right.

Shawn: Byron, Byron tankless. There you go.

Andrew: I had the sense that you told our producer that you’re not entrepreneurial because you are like a semi-professional tennis player. And because I guess it took you a while to start your first big business. But, but what’s this thing that you had in university where you are doing some kind of distributing packaging to companies in Canada, what’s that business.

Shawn: Yeah, still do it today. So I started this, uh, at a very young age. I, um, had a few cosmetic companies here in Canada that were looking for packaging at the time I was working for a packaging company here in Toronto, but we were only dealing with companies that were MOQ minimum order quantities of five, 10,000.

Cartons for example, and they would come and say, why only need a thousand starting out? And I’m like, you know what, I’m going to get them done in Asia, bring them here and sell them. So, funny enough, I started about 12 years ago and those same companies today that, well, 12 years ago, they were buying a thousand Kerns today are buying a hundred thousand currents.

So it’s still a side business I’ve had today. I’ve done it for 12 years. Um, I basically have the boxes delivered to my house. I rent a truck. Bring the truck, bring it to the manufacturer on the middleman. And, uh, as you, I don’t know, I don’t know if you know, but you know, obviously buying stuff in Asia and bringing it here, it can be a very fruitful business, um, because there are a

Andrew: You just buying boxes and then taking it to manufacturers in China, in, in Canada.

Shawn: Cartons. So we’re doing the current. So for example, lipstick cartons. So not the big boxes, more just the paper cards that might be with a shampoo bottle inside or a cream inside, just those Carnes. So they’re smaller Kerns, but we were bringing in about a hundred thousand on a plane. Um, I get 30, 40 bucks.

Oh yeah. 30, 40 bucks outside of my house. I rent a truck, put them in the truck, delivered to, uh, the manufacturer in half an hour away. And we got about eight clients I’ve had for 10 years, I’m running it by myself.

Andrew: You’re still doing this yourself. Are you still driving the truck?

Shawn: You wouldn’t believe it. I still drive the truck.

Andrew: This is prying in your life, but what size revenue are we talking about for this?

Shawn: I mean, for me, for me, it was always, I learned how to do business by doing everything. Um, so I still do it because a, I never want the manufacturer. I have to make sure every box has the label taken off because I don’t want them to find out who I’m actually getting manufactured by in Asia. So do I want to trust somebody else to do that?

So for me, it’s, you know, it’s an hour and a half into my day and it’s, you know, it’s, it’s a break from me. I could listen to podcasts on my drive. I drive the truck, I go home. It’s like, you know, it’s like my mental health hour that I get and it’s a very easy hour. And it still builds that relationship with my clients that, you know, I’m still doing the groundwork for them.

Andrew: Sean. I get the sense that also it comes from a place of paranoia. And I say that because I’ve got that, that it could all go away. Right? And so you need some kind of revenue that at least is there as your backstop. Am I right?

Shawn: Yeah. And don’t worry. It’s not, I mean, we’re not talking huge. I mean, I probably do seven 75 K a year, maybe, maybe a hundred K a year on a good year. Um, so it’s not, you know, it’s not mind blowing

Andrew: profit or revenue

Shawn: That’s profit.

Andrew: profits. So worst case whole software goes to pot people don’t like it. Cause you did something online. You’re delivering boxes you could get by in Toronto. Well, it’s tough in Toronto, but you could get by for 75 to a hundred a year, right?

Shawn: Yeah. And to be honest with you, it’s only about four hours a year of my life. I do four deliveries a year. That’s it?

Andrew: Why didn’t you want to expand that? That seems like a pretty decent business.

Shawn: You know what I try. Um, but, uh, it was, it was early on and when I was doing it, I didn’t have, you know, obviously the wealth I have now or the time I know, I tell you, I had to find a real job that would pay the bills and pay the rent here in Toronto, that when I initially started didn’t, but you know, now that the companies have grown over 10 years, just like any company, um, I mean, you know, those companies now doing millions and millions of dollars when, before they were just starting out.

Andrew: All right. So Lee, uh, exchange leads was that first business, about $30,000 in order to get the software up and running. How did you get people to put their data into it?

Shawn: Um, I guess they trusted me, but, uh, ideally that’s how it was. I mean, don’t get me wrong. You do have some people said, well, I’m not sharing your day. We have a terms and conditions and all this NDAs, we would sign all that stuff, but ideally you’d be surprised. There’s a lot of people that. Just wanted more context.

They didn’t really care about sharing it because they might have bought that from somebody else and uploaded it. We don’t know where they got,

Andrew: how did, how did you advertise yourself? How did you get all that attention? Jigsaw got a lot of attention because they were doing something revolutionary in this world where w just sharing economy was starting to hit and they did sharing it with a twist.

Shawn: just personal branding and content. We spend $0 on marketing. I.

Andrew: So you were writing a bunch of stuff.

Shawn: We had bloggers, we had content writers in-house that were writing content, content, content, LinkedIn videos, um, doing a lot of different things, but it was all more organic. Nothing was done through paid ads.

Andrew: And the revenue was there’s some people who don’t want to pay, who don’t want to upload their files, they just pay you for a set number of contacts. Right.

Shawn: Exactly. But we were also lucky. Go ahead.

Andrew: you basically copy jigsaw. That was their model.

Shawn: We basically copied jigsaw. We got lucky that in the first six months I got a six figure contract by a big company here in Canada, which that helped the growth and obviously paid the bills. And also to be honest, paid to start auto clubs, the next, the next platform,

Andrew: What’s the type of business that would need that many contacts.

Shawn: uh, telecom,

Andrew: Okay. Got

Shawn: it was. Yep.

Andrew: Do you want to say who they are do you don’t have to.

Shawn: Let’s just say the largest telecom in Canada, you can Google it. Everyone find it. They could find it very easily.

Andrew: Sean. I just don’t want these awkward conversations I have after interviews where now it’s not just people who contact me saying, can you edit this part out? But they have people. They, the guests have people whose whole job is I guess, to interact with, uh, with the media and to persuade me. I that’s, I hate those conversations.

I, I put so many checks and balances into my process to let you know, Sean, I’m not editing it out. And still people come in and say, well, but for me you could write, Oh, um, okay. So you had a good business with exchange leads and then there was a small problem, which was that people needed to email them.

Why was that? No problem at all.

Shawn: Well, it wasn’t the problem, but I felt that everyone’s using our platform. I’m building a brand they’re loving exchange leads, but now I’m sending them to a competitor or somebody else. To actually make money off them sending the emails. And I said to myself, well, why don’t I build a platform that actually combines and consolidates the data and the email all in one.

And I think all platforms are going that way with consolidation now. So what we decided to do was build the autoclose platform, um, which was already out there, but we were going to be one of the first to have the database inside. So you don’t have to buy third party data. We actually own the data and we own the emails.

Andrew: Okay. All right. And I, I, uh, keep saying, uh, lead ex leads exchange, but it’s exchanged leads. I’m on the site exchange leads.io. How is that business doing? You still own that?

Shawn: So the part of the acquisition that was, you know, that was part of the acquisition. That’s the one that kind of has all the data. So all the contexts are in insight articles or through exchanges. This subscription model does not work anymore. We kind of moved everyone onto the outer closed platform. So all of our clients from exchange leads have moved on to auto close.

Um, but both businesses were acquired as one in October when we got the acquisition from vanilla soft.

Andrew: And so where, where the, where, so you still get leads for your clients. They still pay you for leads.

Shawn: So, yeah, we still have CA we have a contact database of 37 million inside the article’s platform. So you can purchase the context inside the platform and email them from directly inside the platform.

Andrew: Got it. See how you combine the two. I, um, now I’m following, let me take a moment to talk about my first sponsor. Then we’ll come back in and talk about the rest of the story. My first sponsor is a company called HostGator. I think actually the idea that I had earlier is a, is a natural for HostGator.

Somebody who is listening to us, needs to do this. They go, what did you say, Owler to see who’s raised money, but Crunchbase angel list and so on. It’s a good place to do it. You probably do it yourself for a couple of months. And then you hire a VA to do it for you. Right? You do that. And then you go to what, like head reach or something to find the, the people who, that email addresses of the people who are in the company.

Right.

Shawn: Yeah. There’s many, there’s many different

Andrew: hundred IO. I think we’ve got subscriptions to like two or three of them because I needed to find guests here for Mixergy. All right. So there’s the idea, just package, content, package, package, uh, contacts. Do you think that that’s, uh, did you get, did you get a lot of blow back from people when you were selling email addresses?

I wonder if I’m going to, if somebody somebody’s copying this idea, if they’re going to get some blow back from the tech community, Y how dare you sell our email addresses?

Shawn: Yeah, you’re always going to have a few people that complain. Um, I mean, at the end of the day, people need contacts. People need emails to do business. It’s never gonna go away. So you’re always going to have, you know, just like any business, you can have some of your sour clients, you’re going to have some of your clients that love you.

But, uh, as I said, data is a huge part of everything. Every single company, every app you use is using data. Um, so I don’t think there’s a reason why you can’t have their email.

Andrew: All right. What does that idea? Anything else? Take it to hostgator.com/mixergy. When you throw that slash Mixergy at the end, they’re going to give you the lowest price they have available. They’ll also take really good care of you because they know you came from Mixergy and you’ll get up and running with the same hosting company that I used to run Mixergy, easy to work with, easy to grow with, and they will continue to, to build on as you build your business.

But by that, what I mean, Sean is people will see that it’s really inexpensive and they say, well, I, what happens when we get to millions of hits, I’m on a scale with you and they’ll still keep the prices. hostgator.com/mixergy. Okay. All right. So you saw that there was a problem you saw that people needed you to, to, uh, they wanted an easier way to send out email.

How did you build the first version of auto close?

Shawn: So funny enough, um, we ended up, um, there was a few competitors out there and when we thought we can do it better. So I actually had, uh, uh, Outsourced development team at, of Serbia that medicine, New York. And, uh, we went through now, luckily it was my co-founders, um, good friends, so he knew them. So we had a personal relationship.

We had them, we had them build out an MVP, um, took, took about. Six seven months for them to develop it, um, with the outsource team. And then, um, you know, built the MVP, had a lot of momentum going to the MVP. So when we actually launched, we had, uh, obviously we, the exchange leads clients. We can, we can sell it to another people, but, uh, I would say it took our first six months to get the MVP out there.

Andrew: What was in the MVP.

Shawn: It was just your basic email automation. So it was basically, um, you know, there was no video emails. There was no, um, you know, teen tablet was all, you know, if you want to go in and send automated emails, basic, it was very basic and no additional features, no reporting, no analytics, no AB testing, none of the features that people are looking for nowadays.

Andrew: And the reason that your customers are willing to do it is because. You, you were skipping a step for them, and that’s the one advantage that you had over your competitors in the email software space. Right.

Shawn: Yeah. So it was, instead of, you know, instead of people going and going to buy an email platform, then going to buy database, we basically put it all on one it’s all in one house, we can combine the prices and build a model, a subscription around it. Um, so they liked how it was all under one umbrella. Um, everything inside the autoclose platform.

Andrew: But they would have already had that. Right. They had like a MailChimp or whatever to send out email.

Shawn: But the thing with those MailChimp is the biggest difference producers. We are personalized, meaning we, you know, we still use MailChimp in house as well, but that’s more marketing blasting, your 10,000 subscribers, your 20,000 subscribers with us. It’s more personalized one-to-one emails where they’re going directly from your service, your delivery rate, open rate, uh, reply rate is a lot higher.

Andrew: Because, and this is what we were talking about before you’re using Gmail to send out the messages.

Shawn: Exactly. So we connect directly to your Gmail or outlook your GoDaddy account, and we emailed directly from your email. So if you go to your sent box from your Gmail, that email will be in there. Whereas if you’re using a MailChimp, it won’t be in there.

Andrew: What was the first version, a Chrome plugin.

Shawn: No, you haven’t even built a Chrome plugin yet. Uh, first version was a desktop. Um, it was not a Chrome plugin. Wish we did the Chrome plugin. It was actually part of the plan, but we wanted to get it at something out there right away. So it was a, it was all online. We even did a mobile, but it wasn’t as good.

Um, it was a lot tougher with emails on mobile.

Andrew: Why what’s the problem with mobile?

Shawn: Well, it wasn’t really a problem. It was just, um, you know, more people are going to be sending emails and trying to do AB testing and all that kind of fun stuff. It’s easier to do it on a computer. Whereas if you’re trying to check everything on the app, it just, it was too much to fit in the one little screen.

So we had a lot of difficulties early on with the mobile device. Um, we made that. The mobile device, I think after nine or 10 months of development, we finally got the mobile out there, but I still think right now, probably 90% of our clients aren’t using the mobile

Andrew: When you launched that first version, what was the first feedback that hit you in the face and made you think, ah, this is, this is painful.

Shawn: So, you know what it was, it was, I have to give the developers a lot of credit. They did an amazing job. Um, what we did early on, I did four months before the MVP was ready, was I built an email list. And what I did was I had people feel for the last four months, they were part of building it. So I would actually send me a questionnaire saying, Hey, I’m thinking of doing this.

What color do you like for our user interface? Um, and I basically had them. So when we actually launched the business, I sent. One male, I would said, and everyone that came to our webinar to see how the product look, they already felt like they were pot committed. They felt like they were part of building it, which was, which gave us a big movie about, I think 800 demos booked in the first 48 hours.

I only have two sales, one sales salesperson than me. And that was the only thing that we had at that point. So it was a, it was a pretty big launch.

Andrew: And you want to do a demo because.

Shawn: Because I wanted to get there. Um, it’s easy. It’s easy for people to go do a 14 day trial and sign up or not show up, but I need them to come in. And my whole thing was I would give them a lower price if they gave me two to three, things are wrong with the platform. So instead of asking for what do they like ask, what do you dislike?

And I said, I’d give you, I’ll give you a 20%. Just kind of be telling me two things you dislike. And then what we did is we built a big spreadsheet of everything that disliked and, you know, Week over week sprint over sprint chem tackling those,

Andrew: And what it was was you saying to them the software’s ready if you want it book a demo with me. You’ve got 800 people who book demos on your calendar. You sat down on the zoom sessions and assuming it was zoom, right.

Shawn: uh, it wasn’t him yet.

Andrew: You watch them

Shawn: good. It was actually go-to meeting back then, but then we moved to zoom.

Andrew: and then you watch them install it on their computers, watch them connect to Gmail and send it out.

Is that right?

Shawn: Oh, no, we just showed them how the platform works. And then once they actually get the platform, it was, we had recorded videos and onboarding videos. So it was just to show them what the, how the tool actually worked. We didn’t actually connect them with, but now we do have customer success team that actually white gloves, that onboarding approach for people.

Andrew: What was the price for the first version?

Shawn: So you want to hear what I did, Andrew? I actually, and I heard this from the drift CEO, David cancel at a conference. We spoke about it. He, I was like, should I give it a four for free? He’s like charge them whatever they want to pay, because you need them to have something incentivized to go in. So what I actually did was we would do the demo and I’d ask you, so Andrew.

How much would you pay for the software? And you might say 10 bucks a month, it’s yours. You might say $1. And I actually said, it’s yours. You might say $30. So whatever they sit on the price, we just took it. I had some people on a dollar subscription, a month, $5. I didn’t care. As long as they charged, I charged a minimum of a dollar.

I was happy because I felt like they were involved with me with the process.

Andrew: I think I, if I were talking to you, I would up the number. I would say $50, $60. Cause it’s awkward. It’s the founder or frankly, anyone at the company

Shawn: We had some, we had some, we had, you know, we had some at 50, 60, but early on with our, with a lot of people that were following us, they were very like solopreneurs and small, small businesses. So, you know, we had people that would joke and say, well, I’ll give you a five bucks. Ha ha. And I’m like, you want it for five?

You can have any, it wasn’t about the revenue for me there. It was more about, I want as much feedback. To build the best engine.

Andrew: So what, what was the big feedback that you got?

Shawn: uh, early on was, um, it wasn’t, you know, to loading the loading was very slow. Whereas from the loading prompts, um, our user interface was. Uh, just like my co-founder developer, like black and white, it wasn’t like colorful enough.

It wasn’t lively enough. Um, people wanted reporting. Um, people thought the statistics, the analytics, we didn’t provide the right analytics. So we weren’t doing, you know, the, your click rate, the open rate people wanted AB testing want to test a text, email versus a video email. So a lot of those stuff was part of it.

Andrew: We wanted AB testing at that, at that period, even early on that’s that important?

Shawn: We had some people that wanted to, like, they should’ve been, they would come on the calls with me and pretend like, they’re the founder saying, why don’t you have this, this and this? I’m like, well, why don’t have 50 developers? Like, so you get you, we had a bunch of people, uh, some great cloud, early clients, but also some that were.

We’re really, you know, just, just complete headaches. They would, we opened up a 14 day trial and within an hour we’d have one person sign up, you know, Andrew one, Andrew two at Gmail, Andrew three, a Jima, Andrew, and literally set up a hundred to start stealing our data because we had some flaws with the data as well at the beginning where people actually could take the entire database because we’re allowing to see the data before they campaign.

So we had a lot of issues early on.

Andrew: Okay. Um, you would, you told our producer that it was originally you and N a E and account executive who are doing this. So we’re finding, finding leads. Did you even need to find leads beyond the leads that you got already?

Shawn: Well, so we had, we were closing a very good way. We were closing with 30, 40% shot once we exhausted those 800 in the first six months, I think those demos, um, we still, still to this day, I have not spent a dollar on marketing. Um, even to this day, we never paid people. We did a bit of retargeting once, but it didn’t really get an ROI on that.

So we need to find more demos. We used stuff like LinkedIn, we used our own tool, um, and we kept growing it. But after we exhausted those 800, you know, after six months we needed a top of the pipeline, um, which is why I ended up hiring three SDRs out of Serbia to help us find each of us leads for them for that

Andrew: development rep, what were they doing? SDR.

Shawn: Close and LinkedIn, those that’s it. We didn’t put them on any calls, no cold calls. They were on LinkedIn doing LinkedIn automation stuff, um, reaching out well, LinkedIn I’m actually like, so like you connect with somebody and then you’d reach out them with a, you know, Hey, are you currently using a sales engagement platform?

Just start conversations and try and get them to commit to a demo with me or my other AA.

Andrew: All right, dude, this is so fitting in with my second sponsor. You said you never heard his opto. You basically, you need it. Let me tell you how this works. Basically what you just mentioned. That’s what Zapata will do. Now. You can do a search for people based on title on LinkedIn, and you could do a search for them based on number of people, the company, based on all kinds of you could even into Xacto and LinkedIn.

Bring in people who use competing software. Like if they happen to maybe use drift, maybe you realize people use drifts are a good customer. You bring in, people use drifts and then find the sales, the sales, the VP of sales at those companies. And then those are the ones who you target. You could even say anyone who’s been on our site.

I want to target them. The sales people at those companies. So you do that. You get your list together and now that’s tough enough is optimal. Make it easier. The next step is contacting them. You said you want to send a message that says, Hey, Sean, I saw that you’re using this. We thought you might want to understand about our software.

Can I send you a demo? That is what the SDR is. Do. Stop the we’ll do that on autopilot. Just send out messages for you automatically fill in the blanks with their name, fill in the blanks with their company name and so on. And then if somebody responds and says. Actually Andrew, we’re thinking about it.

Boom. That goes directly to the person on the team who gets to respond so that there’s no human, there’s human back and forth. There’s no human in the first step, but as soon as somebody responds, you’re there to close it up. That’s how it works on. What do you think.

Shawn: I think there’s a lot of LinkedIn automation tools. I definitely have to check it out. Um, we’ve used, we’ve used many of them. I know LinkedIn tries to, um, not allow it, but I think there’s so many platforms out there now that are using it and obviously saves a lot of time and helps you build your network.

Andrew: If you’re out there and you’re listening to me and you want to see how this works, I’ve got a demo video that you can walk through and see exactly how this works. I’ve seen people love this so much that the user for their business, I’ve seen others say, you know what? This is going to be my new consulting company.

I’m going to get leads for other clients and charge them per lead. And all you need is Xarelto the software to do it. All right. Here’s a URL where you can go see the demo video right now for free, of course, for free. Here it is. mixergy.com/  that’s M I X E R G y.com/z O P T O. All right. How did that work out for you?

Getting these leads with the

Shawn: Uh, and you know, so far it’s worked out well, each of them have to get 16 demos per month for our AEs. That’s what it, they’re their quotas right now, 16

Andrew: is just typing away. It’s not automated. It’s them sitting down and sending messages out.

Shawn: They have LinkedIn automation running and then they’re using all their clothes for their emails. And then they’re building those connections on LinkedIn. So they’re getting involved in conversations. They’re commenting on people’s posts, they’re reaching out, but each of them have a quote of 16 and then we give those to the AEs and the A’s obviously try and close them.

We close about, I’d say 70 to 75% of those. Um, and then, uh, and that’s rigorous business.

Andrew: Dude that’s, that’s like a fricking army working. Where do I see it? Is there a video where I can go see that? Or you guys have a write-up about how you do this?

Shawn: We do on our, we actually have blogs and a funny F I am currently writing an entire book on everything from my zero to exit, um, all the mistakes you made, everything we did. So I’m probably over a year away, but we just started writing the book, uh, about two weeks ago. So, um, we’re gonna be talking about everything, but our website has all the content from our SDRs, um, tons of content on how to use them, how to scale them, what KPIs you should be, giving them, et cetera.

Andrew: Well, you know what I did look at your content. I went to some rush to see where is this guy getting his co his audience. One thing stood out Lipsin is sending you a bunch of traffic what’s going on. Is this like part of your podcasts thing where you’re doing podcasts, um, as a way of growing traffic to your site, why is Libsyn sending you so much traffic?

Shawn: I, you know what? I have a marketing, I haven’t looked at that, but I do know that, for example, last year I did, I was a guest on 77 podcasts last year. And you know, just today, this is my fifth one. So I do a lot of that because it gives good SEO, good back links. Um, I’m actually starting my own podcast. So I’m guessing it’s probably through all those different podcasts, um, that the traffic’s coming from.

Andrew: Okay. I see it. How effective is it beyond traffic? So, yes, you’re getting a lot of backlinks. We’re going to give you a link as soon as this interview is on and we publish it. What about, um, like, do you see the customers come through from that? Is it worth your time? Because you’re the CEO you’re spending five hours a day just doing this.

Shawn: Yeah. So, you know, funny enough, um, I didn’t for the first month, but the later half, the latter half of 2020, I had a lot of people connect with me on LinkedIn said they heard me on a podcast. They’d love to have a demo of auto close. So we actually did end up getting a lot of demos through the podcast.

And it’s not only that it’s also a personal branding. I’m all about personal branding. I think it’s the next 10 years is all about what your brand is. And there’s no way that better way. To help your brand is to get on video, get on clothes, get on podcasts, get on all these different things, um, to help your personal brand.

Andrew: What’s done. Uh, how have you gotten podcast guest appearances? If we’ll call them now, what’s worked for you for that. You hire a team to do that.

Shawn: No. So, you know, I, I personally reached out actually. So what I originally, what I did, um, I did more sales podcasts. I’m off talking about sales cause I’ve done a lot of keynote speaking and I went to the top 50 sales podcasts and I just got, I had my, my data guys use hunter.io, get their email and I put him through all close.

Sent all 50 people through autoclose clothes and asked them all to, you know, if I can be a guest and they was on some of the big ones, like the John Barrows, JB, um, Jeffrey gamers. And then what happened was, um, this year, you know, because of the acquisition, I’m going on entrepreneurial power podcasts. So, so this year I’ve, you know, every pockets I was on today was talking about my acquisition about the exit, about.

Um, you know, informative stuff and value. Cause my whole thing is, you know, I’ve been through it now once I want to help other people that might go through it or thinking about going through it, to let them know, you know, these are the mistakes, the things to look for, and these are the things that can help you get

Andrew: right. I don’t know why I keep coming up with ideas for some, I’ve never been a come up with idea guy. I actually, I do know what it is. I figure listening to this one podcast, a Sam Parr friend of mine created a podcast where all he’s doing is coming up with business ideas, with his, with his buddy, Shawn.

And so it’s what keeps coming to me. But that’s another idea for a database, right? Imagine this, I get a VR, a VA. In fact, I don’t need the VA. I just email you, Sean. I say, Sean, give me the email. Rest of the people you found helped me out out when I’ll I’ll enrich your data. I’ll give you the email address of the people I find.

Or maybe I get a VA, so I don’t hassle you for that. But we put together a list of the email, addresses the names of the people who have the, the top podcasts in a different category. And we just sell that. Right. And then every month maybe we add to it. So it’s a subscription. What do you think of that? Is that a good business idea?

Shawn: I mean that, I mean, let’s all podcasts are huge. I mean, look at Joe Rogan, they’re just got what a hundred million dollar offer from Spotify for his podcast. So I think Spotify, I’m sorry, spotlight podcasts are just growing and growing. I love them. Um, I think it’s, uh, you know, I know for example, when I go for my walks.

I don’t. I want to listen to podcasts. I listen to tons of podcasts, so I think it’s a great business. Um, the thing is there’s there’s there’s no, I mean, you’d have to update that data all the time because there’s new ones coming out

Andrew: Even better, then you get a subscription.

Shawn: Exactly. Yeah. No,

Andrew: All right. People, if you steal any of these ideas, just contact me. I have no problem with you stealing the idea. I want to hear how it went

Shawn: give Andrew a royalty.

Andrew: don’t even need the royalty. Maybe we just start this out on our own and please don’t put my email address on there.

I don’t need the  dude. I get so many emails now from people who want to be on the podcast. All right. You said you talk about some of the problems so far. Everything’s been going nicely. Give me a problem here and let me feel like you’re a real person and not somebody who’s everything working out for.

Shawn: Well, there’s, there’s, there’s all, there’s all, there’s always problems. Um, you know, one of the things right now, uh, you know, it’s not a problem, but you know, uh, a change as, you know, once you get acquired and you know, now I’m working for the company they acquired us is, you know, the, the pace, you know, as a, as an entrepreneurial boots job, it’s go, go, go.

It’s hustle, hustle, hustle. It’s okay. Wear many hats and, and, you know, you might have processes, but sometimes you’ll pivot from them. Um, but when you work for a bigger company, it’s, it’s, there’s a lot of processes. Everything’s slowed down.

Andrew: building up to this? What’s the problem building up to the, to the exit. Obviously you said one of them is your challenge. You don’t have as much money as your competitors. You’re watching them. Who’s a competitor who you’re watching and we’re in pain watching grow.

Shawn: I reached out IO in sales off, they were more enterprise, but there were, they were great. I mean, one’s a billion, a unicorn company right now.

Andrew: Uh, so why do you think they became a unicorn company and you didn’t.

Shawn: Oh, they raised a ton of ton of money. Um, had 20 times our developers, 30 times our sales staff. So just much more resources. Um, and one thing, you know, for us was when we’re bootstrapped is we have to keep looking at our cash flow every month to make sure do we have enough money to pay next month? And you can’t scale too quickly because then you risk losing the entire business.

We have to continue to monitor every month, a month when we were strategically, you know, hiring new people.

Andrew: He’s also a producer. That was one of your big regrets that you didn’t even go more, spend more of your money to grow, right.

Shawn: My biggest regret was hoarding money. Yes. So we ended up having.

Andrew: you have spent it on?

Shawn: I would spend it on marketing and sales and even development a little bit. We had over six figures in the bank when the acquisition happened. And to be honest, if you’re gonna go through an acquisition, if I would have spent that six figures over a year and a half with my team hired more salespeople probably would’ve gotten a two, three X bigger acquisition at the end.

Um, so one of my biggest regrets was always trying to keep money to make myself feel like the company was so secure, where I should have actually been spending the money closer to the acquisition.

Andrew: You mentioned Joe Rogan. One of the things that I keep hearing them say is he says hurt. People, hurt people. It’s like, that’s, that’s where you see that he’s like an emotionally connected person. I have this thing where we’re entrepreneurs with entrepreneurs are very it a little bit. It’s okay. Hurt entrepreneurs, hoard money.

It’s like if you’ve had a really bad pain in your life, you got to hold onto the money. What was it for you? Be open.

Shawn: You know, it was, it was just the, my business was my life. And if I ran into money for the business, you know, I lose everything. So my whole thing was keep the money at least have three, four months of cashflow at all times and not spend it, even though my partner was telling me, spend, spend, spend, but, uh, it was just inside.

I just felt guilty if I would spend it. And if for any, for any reason, I would have to put my company and my team at jeopardy. I just wanted to make sure we always enough cashflow in the

Andrew: Why did you have like a problem growing up or your parents were ran out of money? Did you have a previous business that we didn’t talk about that ran out of money? What did

Shawn: No, no, no, never, never, never, um, had any money issues at all. Actually, it was just more that, uh, I guess, you know, I am a risk taker, but when it comes to big things like that, I’m more risk averse where I looked at the, you know, you know, the longterm and not only the short-term, but, uh, no, it was never, I never had a situation where I was, uh, When I needed it, but, um, I don’t actually not looking back.

I don’t even know why hoard the money. I still regret it to this day.

Andrew: All right. The sale happened. Not because you were looking for somebody to acquire you. You told me before we got started, you, uh, you just got an offer. How did they come up to you? Why did they come to you?

Shawn: So we were at the SAS North conference in Ottawa and, uh, we were just there, we were a sponsor. They’re a client of ours. And about 20 feet away was a company called vanilla soft. The CMO came and said, They focus on, um, phone and SMS and we’re like, Oh, we focus on email. So we showed them it the next day he had the CEO come do a demo and he’s like, Are you looking to get acquired?

I’m like, well, I never thought, I mean, obviously I’m thinking about down the road, but I’m not ready for it. The financials aren’t ready for nothing. And then from there he’s like, well, think about it. And I’d love to show my team a demo. And then that was November of 2019, and it took about 11 months until our exit.

But, uh, it came out of nowhere. We didn’t have audited financials. It was our financial word disaster. Cause we’re so go, go, go.

Andrew: What do you mean by disaster? What was missing?

Shawn: Well, they weren’t audited. We would have, you know, uh, things in the wrong categories. We’d have, you know, uh, um, our contractors and our commission in the marketing where marketing and sales, and it was just all over the place. So we lost a lot of credibility because here’s a guy that’s a very intelligent guy.

That’s looking to acquire us. It’s like, well, your financials are all over the place. Like, what else is all over the place?

Andrew: Yeah. Okay. And then they were offering to buy you don’t you get as a, as an entrepreneur, a lot of people who come to you and they say, maybe we can buy you. It’s almost like the way they say hello.

Shawn: Oh, it’s it’s even more now they came to us and, uh, we went through a whole day of going through our financials and they gave us an offer, um, which, uh, I was, uh, was, was well below what I thought the value was. So that’s kind of where I felt like when I was waiting for them to give me the number, which would be the floor.

And then I was in the come with the ceiling and then that’s going to where we can actually start doing the negotiations.

Andrew: And so this was, this is partially why it took a year. Why else did it take about a year, the financials being an issue? What else?

Shawn: W, you know, it came down to price. Um, well, I wasn’t, as I said, I wasn’t looking to get acquired. So the first few numbers they came up with were close and I said, listen, if we’re not, we’re, we’re, we’re very far off. It’s just not going to happen. And I said, let’s just, you know, if you want to revisit this at a later time, and then I just walked away.

Three months later, um, they came back and, uh, we started negotiating again. So, um, I always say when you’re, when you are getting acquired, one thing for the listeners is, um, if you’re not looking to get acquired and you do it acquire, you have so much leverage in the negotiation that you should use that to your advantage.

Um, because it’s the people that are desperate to sell that ended up getting hurt with the acquisition.

Andrew: you go to other companies and say, look, this company, vanilla soft wants to buy me. You should con what should I do? That’s the line? What should I do so that they say, well, maybe we should look at you.

Shawn: You know what, it’s funny you say that, that they had me sign an NDA and gave me a letter of intent so quickly. I didn’t even have the opportunity to

Andrew: Another regret.

Shawn: no. Um, I was happy with her. I was happy with the, uh, with the outcome. Um, I knew in my head what I was looking for, the number I had and I showed why I think I deserved that number and anything below that I was ready to walk away from the beginning.

I was not desperate to sell.

Andrew: All right. You told me before we got started. Look. The one thing I’d like to do is tell people about some of the mistakes I made. So if they ever go through this, then Dell, there’ll be better off. If they go through an acquisition, what are the mistakes?

Shawn: So there’s sticks that, you know, when going through an acquisition, first of all, it doesn’t happen overnight. It takes some time, but one thing was, um, Was the working capital, um, it’s part of an acquisition and working capital, your deferred revenue. It also includes for example, vacation payout. So we ended up negotiating that about a week or two before the exit.

And I knew working capital was for my, my M and a course. I took it during my MBA, but until you’re actually really involved in it, you don’t know what that number looks like. And for example, us, we were a SAS platform that got paid upfront. So we’re a subscription platform that got paid up front, but we have to then provide a year of service.

So if I’m getting paid today and I have to provide to your service. I actually aren’t seeing that money. They have to support the new, the persons acquiring us to actually support that contract. So our deferred revenue was, was well into six figures. Um, close to even you got well six in six figures and that was something I never took into consideration off of the acquisition price, because it comes off your acquisition price.

So one thing was the working capital. Um, the second thing I think I did was I have, you know, I’m, I’m working there for now 18 months. Um, you know, one thing I would have done was negotiated my contract, not two weeks before the acquisition, but earlier on. Um, because you know, when you’re so far down your legals and et cetera, you know, again, negotiation’s all about who has more leverage who’s in control, who the ball’s on, whose side of the court and, and where a week before, and I’ve already paid 40, $50,000 in illegals.

The ball’s in their court. They can offer me, you know, offer me whatever I want. I mean, it worked out well, but those were a few

Andrew: You would have negotiated for a better salary, is that we’re talking about more

Shawn: Well, yeah, I would have done more negotiation on my salary earlier on, than later on, because when it was later on, I didn’t have much, you know, I have no nothing to really negotiate when we’re, we’re about to sign the contract for the acquisition.

Andrew: Yeah, but now did you take all the, did you take all of it in cash or there is, it seems like there’s some contingency.

Shawn: No, it’s just strictly cash, uh, cash equity. We didn’t know. Yeah. Only cash equity. Um, so there is, I do have equity in the company. Um, so obviously, you know, mindset of is to grow that company now. Um, but, uh, it was a cash equity deal, um,

Andrew: And you can’t really negotiate your salary. It feels like that’s something you can go back and renegotiate or negotiate for a bonus or something.

Shawn: Yeah. I mean, definitely. So that, that has happened, but it would’ve been something that, you know, being proactive, obviously I’d like to be, I’d be like proactive now. It’s all been settled and you know, we’re, we’re both happy, but, um, those would be two things and also. The last thing would be as be more prepared.

Um, as I said, we didn’t have our financials ready. We didn’t have our share certificates printed up and incorporations and everything in a big folder, we had to look for everything and it just made us look not unprofessional, but kind of like, you know, um, junior, it looked like we weren’t prepared, which we weren’t.

So it gave them leverage early on.

Andrew: I get all of it. The one part that I don’t understand is why is it a problem? If you collected money up front and they have to service your customers later on, they have the balance sheet, they have the money to do it. Why, why was this an issue at all?

Shawn: Because that comes off the acquisition price. So say, for example, say, for example, my clients, or say you paid me $5,000 today for a subscription. Okay. Today for 2000, until 2022, the new company now has to pay for support and everything. Server

Andrew: re they removed that from the acquisition price.

Shawn: You do always it’s working capital. Yep. It’s always removed.

Yeah. So that’s only on subscription, but if you get paid on, so if you still have to provide the service after the acquisition date, you owe that back to the acquisition or.

Andrew: All right. I’m looking at the email that you sent me since now. I know so much about you. I’m wondering, did I send him into our form, which is the way I handle almost all the messages I didn’t. I actually asked Andrea my assistant to help. And so I’m looking at your email it’s because it looks like just a personal email from a founder.

You didn’t type this out now. I know you just use your software used auto close, right. To like put mail, merge me in. It works really well. This is one of the few messages that I did not send into into the forum,

Shawn: Yeah, I actually did. So you’re one of, one of 50 and all five that were today were from the same email. I just personalized to you.

Andrew: but it’s all, all it’s autumn. It’s an automation that personalizes

Shawn: It was all automated. All I press go and everyone was personalized. One day, booked me in the 20 to 22 podcast guests, but that one email.

Andrew: A lot of people do that end up saying, Hey Andrew, I’m a longtime fan of Mixergy startup podcasts. And I realized, ah, they used the title that I actually, that’s not the way people would refer to it. What you did was you just kept, you kept the mail merge to a minimum here. It’s podcast, guests as a subject line.

And then Andrew comma is the only thing that’s, uh, that’s fill in the blank. The rest of it is just three. Oh, and you also kept a short three paragraphs.

Shawn: 50 or 75 words. That’s all I do.

Andrew: I wonder if saying I recorded with John Barrows and Jeffrey Gitomer is helpful. I think that when I find that people have just recorded with other podcasts, first of all, I didn’t know who they were, to be honest, I wasn’t thinking about them, but then usually I think, Oh, they’ve doing a panel around a podcast, I should say no, but I guess it wasn’t an issue for me and it wasn’t an issue for us.

Shawn: Well, yeah. You know, I mentioned, I mentioned some of those names, it worked last year for sales collect in the sales industry, know them, um, and they two of the better podcasts out there. Um, but yeah, for the entrepreneurial, I had to have some sort of nugget to get in because I haven’t really done many, many, a entrepreneur podcasts, but, uh, you were one of the people that personally replied and I did appreciate that reply, Andrew.

Andrew: All right. You want to know something? The founder of superhuman, the email software. He did a demo with me where he insisted I couldn’t use the fricking software. I couldn’t pay him until I did a demo with him. And so we did the demo and, and, um, he says, tell me some of the things that you do, let me go through your email.

So he’s watching me email and go stop right there. We could do a one-click thing for you where we don’t just give you a canned response, but we’ll put Andrea in the two line for the, so that’s what I use as soon as I definitely read it. I definitely liked it and I responded, but I just use this automation that said, Andrea, could you help?

And then I emailed Andrea.  All right. Automation on top of automation on top of automation. In this case, it worked, most people are kind of knuckleheads about the fricking thing. I want to embarrass them so much sometimes because I get so freaking out angry. It’s like, Andrew, I’ve been a longtime fan of mixer.

Do you start a podcast featuring Andrew Warner? And I want to tell you, uh, you know, you weren’t all right. That’s just my own personal anger issues. We’re going to put those aside right now because we’ve learned a lot in this interview. Number one. We learned about data that you can basically take somebody else’s discarded idea.

Right? Jigsaw was an idea that that did well. You, you jumped on it and you built it up. Number two, we came up with a few business ideas that I’ve shot out at you, which is like, let’s sell data. Let’s just get email addresses of podcasts and all that stuff. Number three, we learned, get your, get your finances in order.

What else did we learn? What did I, what am I missing? Number, number four.

Shawn: I would just say number four is, expect the unexpected. You might an acquisition might just land on your lap. So always be prepared.

Andrew: Number five. Don’t be so cheap. Stop hoarding money. Maybe you need like a year now. Actually I’ve got a number that I was need to keep in my mind. And then, and then the rest I’m willing to risk, but I need, I need some big cushion. All right. Thank you so much for doing this interview. We’re going to look forward to the book.

The company name is, uh, auto close with a K and I’m grateful to the two sponsors who made this interview happen. The first, if you’re hosting a website, go to HostGator, hostgator.com/mixergy. And the second, if you want to get leads for yourself, or maybe you want to sell that as a service to other people, go check out, go watch the video on Zapata.

Here’s a URL for that. It’s mixergy.com/ . Sean. Thanks so much for doing this interview.

Shawn: Andrew. Thanks for having me on.

Andrew: All right. Bye bye everyone.



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