Practical Founders Podcast

Chris Kern is an expert independent M&A advisor who has helped over 150 growing tech companies get financing, obtain investment, or sell their companies. He is Managing Director of Windstream Partners where he advises smaller SaaS and tech business owners in selling their companies for successful exits between $10M-$50M. Chris got his start on Wall Street working on large finance and acquisition deals, but he quickly shifted gears 20 years ago, moved to Phoenix, and started working only with small software companies with growing SaaS, software, and technology businesses. I have known Chris for over 15 years. In this interview with an active M&A professional who helps many practical SaaS founders sell their companies every year. I ask Chris the most common questions I hear from practical founders who are thinking about selling their companies someday. “There are a thousand times more companies getting acquired for less than $50 million than all of those that sell for billion-dollar valuations. You just don’t hear about these deals because they are smaller and often have confidentiality agreements in place," Chris explains. In this episode, Chris explains: What’s happening right now in mergers & acquisitions of software, SaaS, and fintech companies that sell for $10M to $50M? What are common valuations ranges for software startups and small companies with revenues between $500K and $5M in ARR? What are the factors that affect valuation one way or the other? Can you really sell a startup for a multiple of revenues when it’s still small? Who is buying these smaller software companies and why are they buying them? What is the general process of selling your company? What should they be thinking about before they try to sell to maximize their outcome? Is it better to have outside funding or to have bootstrapped when selling your company? Learn more at practicalfounders.com. 

Joshua Strebel started a small SEO and website agency in the early 2000s after graduating from university. Joshua and his wife Sally experimented with website hosting using WordPress with low monthly fees while they ran their services business in Scottsdale, Arizona. WordPress became popular and eventually Pagely was formally launched as the first managed WordPress hosting platform in 2009 and they closed their services. business. Pagely grew steadily until 2013, when dozens of inexpensive managed WordPress hosting competitors entered the market, all backed by big VC funding. Pagely was bootstrapped with no outside funding, so they slowly changed their focus to serve only the biggest companies the largest WordPress sites with the most complex needs. Pagely revenues grew 1000% in just 3 years after focusing on the top 1% of WordPress customers. Pagely was profitable and sustainable with many big-brand large customers when they sold the company in 2021 to GoDaddy, the huge website hosting company also based in Arizona. With nearly $10 million in ARR, Pagely’s strategic exit created generational wealth for Joshua and Sally and life-changing wealth for multiple key employees. Learn more at practicalfounders.com.,

Dave Savage was a top-producing mortgage loan officer in the early 1990s who used computers and software to help him sell more. He became a software entrepreneur by creating a new software solution for loan officers to help them educate their clients and sell more. He sold $120,000 of Mortgage Coach on stage at a conference on their first day, which started their 25-year growth journey in the software business.  Mortgage Coach helps loan officers transparently present loan options and educate their clients about the financial impact, which differentiates the loan officer and helps them increase sales and referrals. It started as Windows software then eventually transitioned to the web and mobile devices.. The company grew steadily until the mortgage meltdown in the Great Financial Crisis of 2008-2010 caused its sales to plummet, but it didn’t kill the company. After 2012, they started selling to large lending companies, not just individual loan officers.  Mortgage Coach was a growing and profitable software company with no outside investors when a majority of the company was acquired by private equity investor LLR Partners in 2021. Dave is no longer the CEO of the new company called Trust Engine but he is still is part-owner and an active executive leader helping to grow the impact of the new company. 

Beth Sanders was selling computer software and equipment for a regional computer retailer in Ohio when she recorded her grandmother’s life stories on a tape recorder. It was so powerful she decided to create a website in 2001 that allowed anyone to journal and share their life stories. Many experiments led to her first paying customer in 2006: a senior care center that wanted to offer life journaling software to their seniors. The LifeBio software business was born.  LifeBio is a leading “agetech” software that uses Reminiscence Therapy Method and storytelling in various media to help older people to capture and share their life stories. LifeBio’s autobiography tools are also used by the Mayo Clinic and other organizations serving Alzheimer’s patients. During the COVID crisis, LifeBio launched MyHello, a new software app that helps seniors fight loneliness.  LifeBio has grown steadily and profitably to over $2 million in revenue with 48 employees, based in a small town near Columbus, Ohio. Mostly self-funded with a little angel funding, LifeBio serves the massive senior care industry in the US with its easy-to-use apps and tools. Their mission is to help people tell their life stories and share them with their own families. 

Josh Haynam grew up in the Central Valley of California just 100 miles from the tech center of Silicon Valley--without any awareness of tech jobs or tech businesses when he lived there. He was a successful high school entrepreneur, then supported himself through his college years with his digital SEO agency. Their experiments with custom website quizzes showed promising results, so Josh and his cofounder friends started a company to build the first lead-generation online quizzes as a standalone plugin for websites. Interact quizzes showed promise with great customer value, but they struggled to sell their new solution to small business owners or marketers who had never seen quiz software before. They experimented, pivoted, and kept going for seven years before they finally reached $1 million ARR with some profits. The ups and downs continued with well-funded competitors, COVID booms and busts, target market pivots, and more. Interact now is profitable and growing with nearly $3 million in annual recurring revenues, 11 remote employees, and thousands of customers—still without any outside equity funding. Every day, users complete millions of Interact quizzes on their customers’ websites. Learn more at practicalfounders.com.

Esben Friis-Jensen was a technology professional in Copenhagen, Denmark before he and three Danish friends moved to San Francisco in 2013 to start a new startup called Cobalt. Cobalt.io grew steadily and raised several rounds of VC funding to become a sizable cybersecurity software company in Silicon Valley. Cobalt serves large businesses with a platform and services for larger companies to efficiently test and find security holes in their websites and web applications.  Esben left Cobalt in 2020 to start Userflow to help software companies attract, sell, onboard and support their customers without human touch altogether using a product-led growth approach. Userflow is a no-code onboarding software to easily build in-app explanation guides, checklists, and videos for software product companies to improve free trial conversion and new customer onboarding for expanded retention. Userflow has a free trial and uses its own software to improve conversion and onboard customers without human intervention. Userflow is profitable and growing with over $3 million in ARR, 600 customers, and just three employees with no outside funding. Esben handles all growth and lives in San Francisco and his cofounder Sebastian builds the product with their UX designer in Denmark, so about $1 million annual recurring revenue per employee. Learn more at practicalfounders.com.

Massimo Arrigoni grew up in Milan, Italy, and moved to California 27 years ago to create software products and start a family, eventually moving to the San Francisco area in Silicon Valley. While leading product at the software company MailUp, a popular Italian email marketing software, his team built and tested a better visual editor for creating email templates and website landing pages. The free software tool called BEE ("Best Email Editor") became popular and a new product line was born.  BEE end users love the modern and easy-to-use no-code editor which doesn't require email or credit card to use the product for free. The company also sells to SaaS developers who want to embed the BEE builder into their own apps instead of building their own visual editors. BEE is growing with no paid advertising or marketing spend. New users find their free template library and start to use the product instantly with a frictionless experience.  Businesses now pay for the BEE Pro solution making up about half of company revenue and embedded plug-in makes up the rest. BEE is now a standalone company owned by parent Growens with 80 employees and over $10M in revenues. BEE has over 40.000 monthly users and 10,000 paying customers.  Learn more at practicalfounders.com.

“My B2B SaaS startup needs just more warm leads. But we have struggled when we hire junior salespeople to call on and email cold prospects to generate qualified leads that the CEO or salespeople can close.” This is a common frustration for startup and early-stage SaaS founders when they hire sales development reps (SDRs) or business development reps (BDRs) to generate qualified leads. There are many misconceptions and pitfalls that make this even more challenging. Christine Rogers shares her expertise on what is working and not working when hiring SDRs to generate or warm-up leaders in the modern software business. Christine is an experienced SaaS sales leader who has helped develop thousands of SaaS sales and SDR reps to succeed at growing software companies through her company Aspireship. In this episode, Christine explains: What are the different tasks and roles of sales development reps (SDRs) and business development reps (BDRs) in growing SaaS companies What tools, processes, and ideal customer definitions are required before you hire your first SDR Which SaaS business models make the most sense to use SDRs in the sales process Which outbound lead development approaches are productive in generating qualified discussions What compensation ranges are typical for SDRs this year How to think about SDR business goals and targets If you should hire one SDR or a sales manager-doer as your first sale hire When should founders hire “full-cycle” salespeople instead of a lead gen-only SDR Learn more at practicalfounders.com.

Dave Whorton is an experienced tech investor and funded founder who spent the first 20 years of his career at the highest levels of Silicon Valley venture capital and tech-boom startups. He started his career at Hewlett Packard and experienced the famous "HP Way" culture firsthand before he attended the Stanford Graduate School of Business. He joined the preeminent tech venture capital firm Kleiner Perkins and worked directly with John Doerr for several years before launching Good Technology and raising $63 million in venture funding in the early 2000s. He brought in a CEO to run the company before it was sold to Motorola.  Dave joined the large tech private equity firm TPG and directed many investments there before creating his own small venture capital firm and making several investments in the 2000s. Dave started to become disenchanted with the "Get Big Fast" of the venture capital approach. He talked to several founders who were growing businesses without any outside funding and who were building better businesses with better cultures and better outcomes with no intent to ever sell their companies. In 2013, Dave started the Tugboat Institute, a membership organization that brings together Evergreen® CEOs across industry sectors to share best practices and unique insights, and to develop trusted bonds for their respective Evergreen paths. Evergreen leaders are seasoned entrepreneurs, CEOs, and presidents with the vision, creativity, resourcefulness, patience, and grit to build and scale a business that will stay private indefinitely. Learn more at practicalfounders.com. 

Windermere Real Estate is a large and well-known residential real estate broker in the Seattle area. In the late 1990s, they invested to build an internal software system to power their own business and differentiate their services. After using and improving their software for over 10 years, the family owners of Windermere spun out the software as a new company called MoxiWorks. They hired experienced tech entrepreneur and marketer York Baur to lead the new MoxiWorks business as CEO in 2012. After rewriting the software from scratch, they started selling their solution to other large brokers in the US. They grew steadily and expanded their product platform and their team. MoxiWorks is now a leading platform system for large residential real estate brokerages, serving over 800 brokerages and 400,000 agents nationwide, which account for more than 20% of transactions in the U.S.  MoxiWorks started as an internal technology investment at Windermere Real Estate, but their early growth years were funded by the Windermere owners and customer sales. In 2019, Vector Capital made a major investment to help MoxiWorks expand beyond its current $50 million in revenue and 300 employees. See the full-text transcript and show notes at practicalfounders.com.