#133: Bootstrapper Sells School Fundraising Platform to PE Investors - Howard Gottlieb
Feb 28, 2025
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Howard Gottlieb, founder of Read-A-Thon, launched a reading-based fundraising platform that has helped over 4000 schools raise over $30 million. He discusses the explosive growth during COVID, which propelled his company from 40% to 150% yearly growth. Howard shares insights on selling to private equity, focusing on effective negotiation and the emotional challenge of transitioning leadership. He also reflects on the vital blend of luck and hard work in entrepreneurship, emphasizing the importance of humility and strategic wealth management in his journey.
Howard Gottlieb's Read-A-Thon successfully combined fundraising and literacy, raising over $30 million for schools while growing without outside funding.
The complex sale process to private equity highlighted the unpredictability of business transitions, requiring extensive preparation for due diligence.
Howard emphasized the importance of customer acquisition and distribution strategies over product refinement, advocating for market validation when building a business.
Deep dives
The Success Story of Readathon
Readathon is a specialized donation-based fundraising platform tailored for schools, focusing on literacy and reading rather than generalized fundraising approaches like selling candy. The company effectively addresses the needs of educators by providing a turnkey solution that combines fundraising efforts with educational outcomes. With a target audience primarily consisting of schools, Readathon grew to service over 4,000 schools and successfully facilitated nearly $30 million in donations during its peak. This focus on a specific niche has led to a high retention rate and a loyal customer base, distinguished by its emphasis on enhancing literacy among children.
Navigating the Sale Process
The sale of Readathon to private equity in June 2023 was a complex process that spanned over a year and a half, showcasing the typical challenges faced during a business transition. Initially approached by a major private equity firm, the first deal fell through just before closing, emphasizing the unpredictability of these transactions. Despite delays and re-negotiations with various firms, Howard found a partnership that aligned with his vision for continued growth without relinquishing complete control. The intricate nature of the negotiation process required extensive preparation for due diligence, which Howard noted was one of the most time-consuming aspects of selling the business.
Adjusting to Life After Sale
After selling Readathon, Howard experienced a significant shift in his professional role, transitioning from an entrepreneur to a minority stakeholder in the company. He noted the emotional difficulty of stepping away from the day-to-day operations, as his presence still felt necessary to guide the new CEO and maintain company culture. Despite initial doubts, he ultimately found joy in watching the new leadership implement innovative strategies that he had not considered. This adjustment period highlighted the importance of finding purpose and staying engaged in new endeavors post-sale, which he navigated by actively participating in board meetings and working with the new management team.
Learning from the Private Equity Experience
Howard's experience with private equity revealed key differences in business philosophy, particularly regarding the use of debt and growth strategies. Unlike his previous approach of minimizing debt, private equity firms often leverage it to maximize EBITDA, focusing on aggressive growth strategies and quick returns. This disparity in risk management approaches provided Howard with valuable insights into corporate dynamics, highlighting the importance of adaptability in leadership roles. Stewart noted that maintaining value in a business requires understanding these financial strategies while ensuring the company's operational strengths continue to grow.
Words of Wisdom for Aspiring Founders
For aspiring entrepreneurs, Howard's primary advice centers on the significance of distribution and customer acquisition over simply refining a product. He emphasized the necessity of validating business ideas through market demand, encouraging entrepreneurs to focus on revenue generation strategies before seeking external funding. His journey reinstated that a thorough understanding of how to market an invention is crucial and can often dictate a startup's success or failure. By prioritizing sales and effective distribution, entrepreneurs can create sustainable business models capable of attracting investment and facilitating growth.
Howard Gottlieb started Read-A-Thon in 2012 as a reading-based fundraising platform that helped students raise money while boosting education. Their easy platform and simple fundraising approach created amazing results. The Read-a-Thon business grew steadily and profitably without any outside funding.
Read-A-Thon helped over 4000 schools and students raise over $30 million in donations. Their platform has tracked over 30 billion reading minutes by students who have used it to earn donations.
Read-A-Thon was successfully acquired by private equity investors in early 2023 for an undisclosed amount. The business has continued to grow and expand with a new CEO and key executives, with Howard on the board as an advisor and now a minority investor in the company.
Quote from Howard Gottlieb, founder of Read-A-Thon
“I have been very blessed and very lucky in my journey with the success of Read-A-Thon. Everyone should realize that and have some humility.
“If you succeed at the game, you can be the smartest guy or the smartest woman with the most brilliant idea, but it still will take 50% or more luck for everything to align correctly to succeed. Just realize that. It takes a lot of good fortune.
“At Read-A-Thon, our lucky moment was COVID because online fundraising was only in its infancy. When COVID hit and schools were out, Read-A-Thon was almost the only viable option. Our growth went from 40% a year to 100%, then 150% a year. So that was luck after all these years.”
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