How we acquired a competitor for $40,000

“zero dollars for like three four months in a row our customers were trying to are technically we became profitable April 2020 we were very bootstrapped um and we just we saw an opportunity one of our competitors was really going through the same problem except for worse they were a much smaller competitor they were doing probably 120 000 in revenue and um they just she reached out to me um and it was in that moment that we were like you know what this makes a lot of”

“made sure I emphasize the stuff she did care about when I got done with the list she's like yeah that sounds right well great let's write it up and uh we'll put it together so um if if they want something complicated just reframe it back to them to get to that end goal what's is anybody fans of the job to be done framework in here got like four or five I love that if you've never searched jobs you've done my life was changed after the job to be done framework Clayton Christensen Harvard Professor insanely awesome so find out what their what job is this”

“changes when you get into people adding stuff to it just tell them the price and say hey this is what what you're going to move to here's the date it's going to be at so that was a big learning we had webinars are better than onboarding I literally went back to our post notes after the acquisition to prepare for this talk and that was one thing they said just do big webinars like don't don't go with each and every person and and work through it these are small customers our ACV for a as a company's twenty two hundred dollars these are like eight hundred dollar customers right so it's a very small ball type of”

“that we spent and we've driven 309 000 um depending on your opinion on Net Present Value right was it worth it yes would we do it again no right like not in this particular situation so a few things um uh for a one one competitor that really make it not something super attractive um number one hindsight is 2020 and 2020 is in hindsight right like for us as a company we're never going to be in that same scenario again where we were like”

“that's a great question I think probably more than likely my competitor would have bought them and they would not have been able to do the migration very well at all so I think some of those customers would have come to us because of how badly uh somebody with a six person we had like a 25 person team somebody with a six-person team would not have been able to do it and I know they would have bought them I totally know they would have bought them so um yes but probably more because of that um and I feel like they they probably would have come”

“Let’s start with Making The Deal Put an exclusivity clause on the LOI so they’re only speaking to you. Just pick a number. We paid more than we likely needed to. Create a Google sheet Q&A with the checklist from your lawyer and add new questions below. How do you run a micro-acquisition? Move Fast Find Out What THEY Want Make it Clean The most important step to moving fast. If they want something complicated, reframe it back to them in a way that still achieves their goal. Always point back to that reason. No kickers. No buyouts. No complicated equity structures. Strictly asset sale Simple LOI”

“Let’s jump in to Learnings Gained Build a timeline around the customers’ view. Build all other pieces of the project outwards. Build a customer committee who can give you feedback. Some key things to keep in mind during an acquisition. Keep Customers First Be More Hands Off Micro-Acquisitions Really Work Just tell people a simple, clear price and leave them alone. Webinars > Onboardings Make the process simple. The ROI was great compared to alternative ways to invest in 2020. We saw nearly 200% NRR on this customer base. We picked up several of our largest customers. We were able to help a ton of people in the industry.”

“Simpler Pricing What we did: "This year, we honor your current price. Next year, it's 30% off your future price. Then you'll be at full price." Problems: We dealt with weird pro-ration issues. It was too complicated for our CS team to easily put together. We had low ACV on these deals that didn’t make it worth it. In trying to care for the customer, we made it hard for them. What we should have done: "We're honoring your price you’ve already paid. At your next renewal, you'll be at market Curate rates." Benefits: Clean Confident Clear”

“Returns and Investment Was it worth it? Yeah. Would we do it again?... Founder500 | September 2022 | Ryan O’Neil Beginning ARR $120,000 Current ARR $250,000 Revenue Driven $309,743.55 Purchase Price (Including Legal) $65,000 Estimated Other Expenses $200,000 Total Investment $265,000 Returns Investment”

“Here’s why we’ll never acquire a 1:1 competitor again (even at a great deal): We’ll never be in need of a quick win like we were in 2020. Getting rid of your third place competitor opens the door for more in the market. Starter acquisitions are great…but you don’t need 2. Never say never…but… Hindsight Is 2020…and vice versa It’s Distracting It’s Hard We had to redirect all of our resources to this effort. We weren’t able to focus on company goals during this time. It’s hard to change the mindspace of hundreds of customers. It’s hard to get alignment with your team around the details. It’s easier to just be the better software.”