In this engaging discussion, Greg Lazarus and Matt Althauser, cofounders of Polychrome, share their unique insights into acquiring developer tools companies. Greg's sales savvy and Matt's finance expertise drive their innovative approach to growth. They reveal the challenges and triumphs of building their portfolio, including notable lessons learned from transitioning open-source to SaaS. The duo emphasizes the importance of aligning products with market needs, navigating risks, and the entrepreneurial freedom enabled by their unconventional funding strategies.
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First Acquisition Attempt
Polychrome initially tried to buy a $50 million company, despite having no prior experience in acquisitions.
This attempt failed, teaching them a valuable lesson about their skillset and target market.
insights INSIGHT
Valued Skillsets
Different stages of a company's lifecycle value different skill sets.
Founders' engineering skills are valuable early on, but financial acumen becomes crucial as the business matures.
question_answer ANECDOTE
Flagsmith Acquisition
Polychrome's first successful acquisition was Flagsmith (formerly Bullet Train), which had $2,000 monthly recurring revenue.
They invested $225,000 for a 25% stake, later becoming 50-50 partners.
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In 'Skin in the Game', Nassim Nicholas Taleb argues that having personal stakes in the outcomes of decisions is crucial for fairness, commercial efficiency, and risk management. The book highlights how individuals and systems that are insulated from the consequences of their decisions often make poor choices. Taleb draws on historical and contemporary examples to illustrate the importance of symmetry in risk and reward, and how this principle affects various domains, including politics, economics, and personal life. The book emphasizes that true learning and improvement come from experiencing the consequences of one's actions, a concept encapsulated in the Greek idea of 'pathemata mathemata' or 'guide your learning through pain'.
Barbarians at the gate
The Fall of RJR Nabisco
Bryan Burrough
Barbarians at the Gate is a detailed and engaging narrative about the takeover of RJR Nabisco in 1988. Written by investigative journalists Bryan Burrough and John Helyar, the book provides an unprecedented look at the financial operations and social history of the time. It centers around F. Ross Johnson's plan to buy out RJR Nabisco, which led to a bidding war involving prominent figures like Henry Kravis and Ted Forstmann. The book includes a new afterword that updates the story twenty years after the deal, tracing the subsequent success and failure of those involved and the impact of the story on the world.
The Creative Act
A Way of Being
Rick Rubin
In *The Creative Act: A Way of Being*, Rick Rubin distills the wisdom he has gained from a lifetime of working with artists across various genres. The book is not just about music production but about the broader creative process and how it applies to everyone's life. Rubin emphasizes the importance of reconnecting with a state of innocence, being aware of the world, and tapping into what he calls 'Source'—an infinite and constant flow of ideas and inspiration. The book is structured around 78 areas of thought, providing practical wisdom, philosophical insights, and encouragement for anyone seeking to enhance their creative expression.
Greg Lazarus and Matt Althauser are two of the cofounders of Polychrome - a company that buys small to medium sized B2B software businesses: with a focus on Developer Tools. Their portfolio includes the feature flagging tool Flagsmith (we recorded an episode with them last week) and the browser automation tool Browserless.
In this episode we cover the ins and outs of buying developer tools.
This episode is sponsored by WorkOS. If you're thinking about selling to enterprise customers, WorkOS can help you add enterprise features like Single Sign On and audit logs.
Scaling DevTools 
