Watch Ryan O'Neil of Curate exclusively on Founderpath. In “How we acquired a competitor for $40,000,” explore the practical strategies covered in this…
Featuring Ryan O'Neil · Published September 1, 2022
Ryan O’Neil walks through acquiring a smaller competitor, from negotiating a simple deal and planning migration to handling pricing exceptions, measuring cohort returns, and deciding whether acquisitions fit the company’s capabilities.
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“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”
give it up for Ryan O'Neal [Applause] thank y'all very much uh the I could have put a better title on this I could have said how I spent forty thousand dollars to get 250 000 of ARR and increase my valuation by 2.5 million but um I I don't know if y'all other CEOs in the room like this I I like Nuance right anytime someone gives me a report I want to find out the bad news too like give me both sides of it and so that's what I hope to share um the founder of curate my wife and I started a floral company
back in 2013 realized there were no softwares that managed like weddings and events so I started building it 2018 or so I had Caterers saying can you please come over and start building the same thing for us and so we we abstracted the tool to be more of a cross uh cross vertical tool we've seen you know 280 growth in the catering segment over the last year so it's been really cool to to see things evolve in our company but we specifically help small businesses like florist and Caterers some really exciting news I figured I'd just share
right here we've been working on for a year and a half on on rebuilding all of Ryan O'Neill's mistakes when he first first programmed it on a WordPress theme and just today we we've been working on this for a year and a half about three hours ago we sold our first customer on our new plg platform um so super cool to see cash coming through um yeah thank you very much but y'all know that moment where you've been working on something and it's like the whole team gets a shot in the arm but this is a more of a what I'm excited
about talking about today is just the learnings we have through an acquisition one thing that I have learned in having chats with a lot of you all is a lot of times Acquisitions come down to what your mission is and the decisions you make are based off of what that mission is so I just figured I'd give you all insight into the decisions we made and the good bad and ugly and what we learned through the process so for some context it was 2020 we're in the special events industry and our growth was like
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
sense uh for for us to be able to make this acquisition and then kind of selfishly as a Founder you always think well someday I'll make an acquisition and it looks like this is a great starter acquisition let's do this one so this is just a really quick way over the next 20 minutes to share the Gory details of it if I've got time at the end glad to take questions but few key areas that we're going to be looking into are making the deal what that looked like for kind of a very small micro acquisition something that could move very fast the second is learning skiing what kind of a what's a summary
of what we actually learned holistically about the process and the last is why will we never likely buy a one-to-one competitor again so we'll just jump in let's start with making a deal how do you how do you run an acquisition a micro acquisition well very first you move fast right as soon as she got an email like it was minutes later and life was happening around me my I had my daughter was scheduled to be born like in a week and a half my dad I wouldn't call it scheduled but he was on his deathbed and so like that was you
know in the middle of that a lot of emotions happening and then I get this email from this person you know in spite of like having to ask tough questions about our company and whether we have to do layoffs things like that uh we never had to thankfully but um I I knew like we had to move fast with this person so I immediately contacted her back said hey so great to hear from you let's hop on a call we were on a call like the very same day I was in like a hotel conference room hopped on a call with her and I said hey you know what let's put a letter of intent together and um I'd like just get
let's get give it and put an NDA on it and just don't talk with any of other competitors until and she seemed very amiable of that about that not talking to any other competitors until we're able to have a conversation so we put together a letter of intent put exclusivity on it and said just just let's just talk together that this would make a lot of sense for us to be able to move fast um we just pick a number as well like if you're going to have to you know start somewhere with the acquisite especially small Acquisitions you're probably more advanced than this person is about theirs if you're if you're trying to
acquire someone larger than you it's probably going to get a little more advanced but just pick a number we ended up at 40 000. we actually gave them an option we said well sixty thousand and we'll do 20 000 up front and then forty thousand if you uh if we have XYZ customers who stay on or you could just do 40 000 and she's just like I just want forty thousand so we're like okay let's do it um we didn't know but she had an investor you know kind of a small small local investor that she had to pay some money back to anyway so
um and then we just created a Google a sheet with the Q a and with the old questions all the uh the sort of the deal room questions you normally get but then we just kept on going down with the further questions like all right what about this like where's this login for this particular thing and then she would answer it and she was very motivated she was very efficient um for her that leads to the next point is find out what they want and in her case she just wanted out she had been doing this for seven eight years when I actually had the idea of the software I was looking for other softwares it did
and it were the one other software that actually did what what we I was thinking of except for there was no way for me to log in or try it out and I was like well I'm not going to do that if they're going to be a competitor because I knew I was going to create a company so we acquired them and so we we found out what she wanted in her case she just wanted out she had lived this phase of her life and she was ready to be able to move on to the next thing she wasn't wanting a big payday she couldn't really make a big payday off of it they were in the red they were making 120 000 which is about a tenth of our size at the time
they were in the red and um so she just wanted to be able to get out of the situation um so that's the most important step to moving fast is just figuring out what they want and cutting through all the other garbage that that you could you know go in and out that you could care about but maybe they don't care about and then I just say all the stuff I just reframed everything I wanted right back to her and said well here's what here's what I'm hearing and I started putting stuff that I wanted in into the here's what I'm hearing but then I made sure I was putting what she wanted all the stuff she doesn't care about but then I
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
customer in effect trying to get done um and then always point back to that reason right if they're like oh I'm not sure I can do this and that just always point back to it she was very motivated our legal said yeah we've never seen anybody close like in three weeks um before it just takes a long time on this and you know never tell a CEO like no one's ever done this before because that's like a personal goal for you and we did we we closed it in three weeks I was uh literally at the uh at uh my dad my daughter was born August 20th my dad passed away August 22nd I literally was
at like the funeral home when I signed the uh the deal and I had my team running most of it like I wasn't like super involved in it so it was really emotional time but it it's things happen when they do you just have to move fast find out what they want and you don't have to drag it out um and the other thing for us at least at this small of a deal like make it clean don't put in these these crazy equity buyouts and all this stuff just make it super clean if you want to move fast strictly asset sell simply L simple Loi we have a really simple Loi that we
use that's downloadable with all the resources that that come with the conference here so if you all want access to that just to see the actual terms that we put together feel free to get that in the packet wherever um wherever they have it to download some learnings uh that we gained in the process number one uh keep customers first number two be hands off number three micro Acquisitions really can work so number one and number two sound like they conflict how do you keep customer first but then be more hands-off like
this is kind of an odd correlation but I'll jump in number one keep customer first our biggest learning of the acquisition the entire thing was to make a timeline of what the customer's experience is going to look like hey on September the 15th we announced that we are doing this acquisition on October the 30th you're going to get a new contract sent to you right like that that with the details on it on you know December the 15th you're going to get a uh an email and we're going to migrate
you on this date right just make that super clear and keep that priority in your company a cross-functioning in your company so that whenever you come back and you're building technical specs maybe you don't communicate these timelines to the customer until internally you've got alignment because you're going to come back and be like oh it's going to take us too much it's time to run this migration in our case we're shutting down the platform it was an old platform it didn't work very well we we had the time because no customers were buying right from us so it's not like we could like you know use it in other
areas so for us we came back we made adjustments to that timeline but we kept that first right keep that customer Viewpoint first build all other pieces around that and then build a customer committee is the other thing that was really helpful we we built we took five ten customers got them in committee we ran all of our narrative by them and even in our relaunch to product-led growth that I talked about earlier even in that relaunch we're still going to be doing that same muscle of building that customer Committee just to take all the narrative by them and and get through you know I was talking to a few of you
before this started the whole reason for me to do that was to figure out why you're here so I can make sure that the narrative that I'm communicating to you all matches with that so that's really important be more hands off this is where it gets weird right because what we found on one of our biggest mistakes was how Hands-On we are and how good of experience we're trying to give to customers and yet it ended up up being a bad a worse experience than it could have because of confusion and and you have multiple team members who are communicating multiple things just tell people a simple clear products and leave
them alone right we tried to say hey we're going to acquire you we acquired Bloom track we're going to honor your current price until the end of this particular time period most of them were annual contracts then we're going to give you 30 percent off of the package that you will have a year later and then a year later you're going to be you're going to be at this new price and I get it like it really was I mean it's coveted these people are worried about money um but at the very same time that made us super complicated when you get into prorations when you get into plan
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
play again for us uh I'll tell you in the next section here why it still was beneficial for us but um and make the process simple right the less steps you have the better just reduce the amount of steps that you're communicating to the customer that said they they do really work right they the ROI was incredible compared to all the other ways that we could have made money in 2020 in the special event space like with special event vendors so the it really was great it was a it was a shot in the arm for our team um it what was cool is like I had all
these sales people who four months before were like man we can't sell against Bloom track because they're so cheap and all these people are going to them and you get inside their books and you realize like it's an entirely different world you know behind that website of what's going on and so you but you got these team members who don't think like that and understand that so it's just really encouraging as a as a CEO to see behind the behind the doors we saw nearly 200 nrr on these we had one customer that went from 3 000 to 30 000 right like two of our largest
customers came from this and so it was a really cool opportunity for us to be able to to grow that customer base um and so we picked up several of our largest customers and they were able to help a ton of people in the industry you know at the end of the day these people would have lost all their data if this company had shut down because they didn't have money they were in the red and so we were able to help a lot of people in the industry helped with some people but then some people just had a different reason not to like us especially in a very uh in our space people can be very emotional
very very small business so simpler pricing so I mentioned this a little bit you know what we did was hey this year you know we're gonna honor your current price next year is 30 off your future price and then you'll be at full price and this is ignoring the fact that we change prices in between right as a company and so you've got all these contracts out and commitments out what we should have done well you should have said hey we're honoring your current price at your next renewal here's going to be your new curate it's like what we were offering was you know for for some
of them was a lot but just because they talk a lot or can leave a bad does not mean that we should have adjusted our pricing and made it more complicated and a headache for everybody else so the benefits of that are clean confident and clear the the problems are other weird proration issues we had to load these low ACV deals that weren't sticking with us anyways and we just like prolong it prolong the pain with them so returns and Investments um the beginning error of the cohort of customers that came from Bloom track or
120 000 so we paid forty thousand dollars for 120 000 of ARR which again sounds wow that's an awesome deal it was and it helped us close uh another round of helped us close the actual round of funding we were primarily bootstrapped up to that point in time uh the next year we closed a 2.5 million dollar round of funding so these numbers help in saying hey we grew through covid um our the current ARR of that same cohort is around 250 000 of the revenue driven I just ran a query on this if you
don't have Google Sheets queries if none of y'all use that you need to look it up gosh it will change your life Google Sheets queries um but I just ran a quick query on this it's kind of like vlookups and all this other stuff but so much more powerful and really quick to pull data uh we've had 309 000 that has come from this group of customers paid into our company uh the purchase price including legal probably was about 65 000 and honestly they would have taken twenty thousand for the deal I feel like I fee I feel
like if I just told her can you give me your company she would have considered it okay like now looking back because she wasn't getting into the money it was an investor who's getting most of that money anyways right like so I now looking back but we paid 65 000 for it um estimated other expenses this I've just ran some quick you know metrics like developers and customer success time and all this stuff we had to put into it probably two hundred thousand dollars so maybe 265 000 as an estimate
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
looking for the growth looking for opportunities and never in need of a quick win like we did and the second is getting rid of your third place competitor they were like our third place competitor in this and specifically in the floral space opens the door for others in the market and so all of a sudden we've seen three or four other little companies pop up um I don't have time to get into it but one who is a co-founder of the company we acquired but we're dealing with that through legal um and so all of that stuff uh it just happens right you open this door for
more people in the market to pop up and then starter Acquisitions are great but you don't need to right like you've already had your starter acquisition let's not just keep let's let's keep focusing the other reason it's distracting we had to redirect all of our efforts to this right like learning how their platform was built um we they I mentioned this problem the next slide they didn't have anybody that came with it right it was literally just her and she had a couple like part-time kind of people that really didn't come with it and she was already gone I mean she she was there she was great through
the process but like she wasn't going above and beyond to to sort of make everything work once the papers were signed so um just got to keep that in mind your team is the one who's putting on that effort with the micro acquisition and the next is we weren't able to focus on company goals during this time right things that it was during this time where we kind of conceptualized the idea of in our Market we had to move product-led growth because we had such small acvs really great close rates we closed like 60 of the florists we talked to and like 40 of the Caterers we talked
to but the problem is getting people to talk to you right like they're busy they've got a lot of stuff going on so it was during this time we need to move to product-led growth well we couldn't we were going through this acquisition process um and then it's hard to change the Mind space of hundreds of customers right like of how they're working at the same try and trying to move them over especially with our business model which was not very product-led growth um and it's hard to get alignment with your team around the details a lot of the pieces that are going on in
the process of an acquisition especially if you don't have a muscle Built My Board member was a CMO at a company who was kind of like you know staggering for a little while in their spot he became the CEO and immediately did this like brilliant like three acquisition and like these reverse acquisition moves just brilliant guy at doing it he's built this incredible muscle on it if you want that to be your muscle right like but that was not our muscle and so that's that's a piece on there and then it's just easier just to build be the
better software right it's the the last it's just easier just to build better and build faster especially when you're in a space that you're going one-to-one with the competitor if we were to do another acquisition it would need to have these parts number one we said come with the team we aren't just buying a product right like we now have to make sure it comes to the team be very product driven company so not not just a revenue acquisition it's not just like a revenue opportunity um be a complimentary product to be something that adds value as opposed to something that we're trying to current
product with uh automatable we've got to be able to have an easy way to automate the integration as opposed to doing a lot of manual work and then more than just a chair so those are some pieces for us so well it uh it's glad I think I have two minutes so I'm glad to take a question or two about any other mistakes we made
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
through uh one way or the other a portion of them but I don't know about the biggest two which are kind of our big you know we we have one that's at thirty thousand one that's like twenty five thousand I don't know if they would have come through I'll come here and back over yeah yeah yeah you go ahead real quick
yes I'm sorry I I said that in two seconds and as a CEO that means everyone in the room knows it um so yes we migrated them we moved them from their platform onto ours and we deprecated their platform in four months there were slightly we were a much more advanced program like so if a florist is creating like an arrangement on a table right like there's a recipe with ingredients that go into that we kit we cover the back side of that well for them they only covered one of those
whereas we had like two recipes you could attach two recipes to it well with that model um it was super easy to migrate some of that but there was like a copy and paste feature where you could copy a list of ingredients and paste it somewhere else that we had to do and a few other small things say again I actually did we we didn't think I I was like why it doesn't even make sense until I used it in our product and I was like oh this is really cool like this is really graceful um so we did build that uh one of the problems as well is our largest
customers had these custom built Franken reports right in this other platform and they were wanting us to reproduce those and with you just you just can't so I'll be open for questions after as well if anyone uh wants to stop by thanks so much [Applause]
