I write this interview in the summer of 2021. Inflation has soared, global supply chains are in disarray, and countries are suffering their hottest temperatures on record. Some might say these are trying times, but for Ronald Blüthl and Norbert Hüthmayr, it’s business as usual.
“Failure brings us closer to success,” they argue, embracing entrepreneurial uncertainty like statisticians. Rather than bet their time and resources on a single horse, they build multiple SaaS projects and back only those likeliest to win. A strategy that has produced two exits so far.
In May 2021, they sold their second business, Secrets.so, on Acquire.
“Secrets lets you securely send confidential information online for free and without software,” Ronald said. “It helps people safely share things like passwords, authentication keys, and so on. Once the recipient views the data, it’s destroyed, and our servers never see it.”
Norbert had seen others succeed with a similar service, and with better pricing and extra features, the cofounders believed Secrets would do well.
Only one problem prevented them from pursuing it – time. Monetization was months away and more advanced projects called for their attention. At the same time, they didn’t want a promising project to fail simply because it was maturing at a slower pace.
“Norbert and I are both quite busy,” Ronald said. “Each of us runs multiple projects, and some yield a return faster than others. We both needed to work on other projects and Secrets was very early in its lifetime. It would’ve taken the most time to monetize.”
Ronald and Norbert fall into that class of entrepreneur who loves to build but lacks time to scale. Secrets was one of several ongoing projects, and as it needed more attention, it slowed growth of their whole portfolio. You’re only as fast as your slowest horse, as the saying goes.
Secrets needed more help than the cofounders had time to give. But unlike the horror of the racecourse, Ronald and Norbert didn’t put a bullet in their project, they sold it on Acquire – earning a return on investment and leveling up as entrepreneurs.
Coding on Grandma’s Computer
Ronald is 26 years old and has been a software engineer for most of his life. He began as an apprentice and then later freelanced, helping companies build better software. But when he gained the skills and confidence to code his own products, entrepreneurship beckoned.
“I’ve been a software engineer for over a decade,” Ronald said. “I’ve always been interested in building products, but I’ve been consulting for five years as it helps pay the bills. I only started bootstrapping products and then selling them on Acquire in the last couple of months.”
Ronald met Norbert while apprenticing at a logistics company. They worked on various projects together – web apps, mobile apps, you name it – and enjoyed learning from each other. Norbert was keen to collaborate with someone who loved software engineering as much as he did.
“I’ve also been a software engineer all my life,” said Norbert. “I started coding on my grandmother’s computer when I was twelve. I didn’t study engineering, just jumped into regular nine-to-five coding. But I grew up in a family of entrepreneurs and wanted that freedom.”
Where Do Startup Ideas Congregate?
In 2016, Ronald and Norbert started a software development company with a mutual friend. The trio would freelance to make ends meet, and in their spare time, brainstorm new product ideas and build them in public to raise their profiles. Marketplaces offered them plenty of fodder.
“I always scan startup marketplaces for interesting businesses to buy, scale, and then sell again,” Norbert said. “I found a product called Password Link that I loved, but the owner wanted more money than I was comfortable paying. The idea stuck with me, though.”
Rather than raise funding to finance the acquisition, Norbert took the idea to Ronald and their partner: “I asked, ‘Could we build this?’ and Ronald agreed we could but that we should upgrade the experience with new features.”
The first iteration of Secrets was a simple text-sharing tool. You enter a secret in the text box to generate a link that later expires once the recipient views the associated file. Building in public helped generate interest in the product without a large marketing budget.
“Secrets started with a laser-focused goal of sharing text securely,” Norbert said. “We wanted to test that idea so we built an MVP that did nothing else. We gained a bit of a following and a lot of interest, but as you know, interest doesn’t always mean people will pay for the product.”
Will They Buy Or Should You Sell?
Without the gift of prophecy, you never know whether people will pay for your ideas. Knowing this, the founders built Secrets on new architecture. If the product failed, they might still be able to sell it, and if not? Well, at least they’ll have learned new skills.
“Secrets was an experiment with new technology,” Ronald said. “We tapped into Next.js because it’s a popular framework now. It made sense to build Secrets with Next.js as it helps increase the resale value. We learned a new framework with a real product.”
Unfortunately, Secrets didn’t set the world alight at launch. It garnered some early adopters, but Ronald and Norbert saw the writing on the wall: They’d have to give up their other projects and focus on Secrets full-time if they wanted it to succeed.
The risk to their portfolio, however, outweighed the benefits.
“You always ask yourself, ‘Did I quit too early?’” Norbert said. “Secrets clearly had potential since the market already supported a paid product. You never know of course, and you can always do something better. But we weren’t confident enough to invest all our resources in it.”
Knowing when to sell is never easy. Sometimes all a project needs is time. Shelving something for the future might seem counterintuitive, but launches fail for countless reasons. Time might help you evaluate what went wrong, recalibrate your positioning, and relaunch to greater acclaim.
“If you can dedicate yourself to one project, go for it,” Norbert said. “Sometimes you need to wait for inspiration. Spend a month or two working on something and you might arrive at new ideas that change your decision to exit.”
Ronald and Norbert, however, were happy to exit.
“I recently listed all the projects I’ve tried online and the vast majority failed,” Norbert said. “You just have to keep going. We’d run out of time but didn’t want to bury it, so we handed it to someone else. That gave us closure and allowed us to focus on other projects.”
How a Product Roadmap Helped Them Find a Buyer
Ronald and Norbert are fortunate to have both Acquired and sold on Acquire. Norbert Acquired two small companies, and Norbert sold a previous project, Skunk Mod, a Slack app for community moderation. As a result, they knew how to find a buyer quickly.
“We listed features similar products didn’t have and shared them with potential buyers,” Norbert said. “We shared every monetization strategy we could think of. Not only did this help us secure a buyer, but it meant the new owner could continue our ideas.”
The pair also wrote a manual explaining how to run their software. After building the primary feature and purging bugs from the codebase, they wrote everything down that they’d want to know if they were new to the company. Then it was a simple matter of listing.
“I went through Acquire’s guided process and entered as much detail as I could,” Norbert said. “The Acquire team also helped modify the listing to make it sound more appealing to prospective buyers, explaining which information we should put in the listing title, and so on.”
With few paying customers, the cofounders eschewed most financial valuation methodologies in favor of cost-to-duplicate. They reviewed the Acquire multiples report to get an average for pre-revenue startups, and then adjusted it to recover some of their product development costs.
“With pre-revenue, valuations can feel like rolling a dice, but we wanted to be fair. We went by the number of hours of engineering we’d invested. Once we got a ballpark figure, we rounded down to a nice round number.”
(Stan Dimitrov, another founder of the How I Got Acquire’d series, valued his early-stage startup using the same model. In SaaS, cost-to-duplicate helps put a price on technology that has yet to find or penetrate its market, especially when financial data is scarce.)
Over 30 buyers reached out to Ronald and Norbert to discuss acquisition. All asked questions about the product and how they might grow it. A few sent offers, but generally, they undervalued Secrets’ potential and the time they’d invested to develop their MVP.
“You have to be patient,” Ronald said. “If you need the money, you’ll jump on the first offer. But if you have time and don’t mind waiting for a month or two, you’ll get better offers.”
Having been on the buyer side, Norbert was keen to be as transparent as possible. Building in public meant even small exits reflected on the cofounders’ reputations. They were confident in their MVP but wanted to reassure buyers with detailed responses to their questions.
“You have to be honest and upfront about what you’ve built,” Norbert said. “When I’m on the buyer side, I typically look for someone I feel is honest. So I tried to explain everything in detail, not just single-line answers, because I knew that would help us close the deal.”
Eventually, Secrets was Acquired by someone who already ran a technology startup and was familiar with sales and marketing. They would expand on the operations side of the business and double down on marketing – a formula they expected to help Secrets monetize.
Better yet, he was happy to pay the cofounders’ asking price.
“We sold Secrets to the first person that met our target acquisition price,” Norbert said. “But you also want someone who understands the idea. It’s nice to know that the future owner will continue you building on your foundation. It’s just a great feeling.”
In just 30 days, Ronald and Norbert closed the acquisition of Secrets. They had little to say about those closing stages other than it being smooth and easy. Their past acquisition experience helped, and they’d prepared to exit long before listing.
One thing they’re eager to emphasize, however, is that code matters. As engineers, they could instantly recognize poor quality code, but not everyone has that advantage. If you’re a non-technical buyer, the pair argues, get help validating the code before acquiring a SaaS.
“Just because someone built something doesn’t mean they should sell it,” Ronald said. “We tried to build a decent MVP. As software engineers, we care about good software. We wanted to give the buyer a codebase he could work with and build upon.”
An MVP doesn’t need to be the perfect representation of an idea. If the cofounders had believed that, they’d never have sold Secrets or might have been so busy perfecting another project they’d never have built it. Instead, they argue, focus on a core feature and build that simply but elegantly.
Technology founders like Ronald and Norbert often fall victim to their creativity. The lure of a new idea is hard to ignore when you have the skills to bring it to life. But if you test your hypotheses on a limited audience, you’ll know which ideas are worth pursuing and which to exit.
