Time, like money, is an investment. Knowing when to spend it is one of thousands of critical decisions you’ll make as an entrepreneur. Why? You’re often in a race to market: Can you build something fast and good enough to find and capture market share before your competitors?
Stan Dimitrov (@stanislav_dim) understands the value of time better than most. Founder of software development company, RAZORlabs, he measures project potential in developer hours. What features will this MVP need? Can we scale before the copycats and competition?
His team had logged hundreds of hours on their note-taking app Relanote before deciding to exit. To compete, they needed more time and capital than Stan was comfortable investing.
“We decided not to push Relanote because the competition was fierce. We were competing with companies that had raised millions. It would take eighteen months to two years to get profitable with it, and without venture backing, we’d never last that long. It was a lost cause for us.”
Relanote got Acquired for five figures – a modest sum that helped repay some of the time Stan and his team had invested in building the product. The acquisition freed Stan’s team to pursue better prospects (including ad-blocker Blockzilla) and gave Relanote a new life in others’ hands.
Your MVP Predicts Your Future
Stan had launched Relanote on ProductHunt and it made the top ten. Although customers were positive, they wanted better features that Stan’s team didn’t have time to build. It was a tough call: he didn’t want to close Relanote’s doors but give the keys to someone else.
“We grew Relanote organically over time, which was the positive thing,” Stan said. “But the negative thing was that we needed a lot of development hours to build the features to make it scale. And at this point, you need to evaluate if you’re going to invest that time or not.
“Some entrepreneurs linger on for years, developing too slowly and never acquiring many customers. It’s like a slow death. We usually push hard for a few months, and if the product doesn’t meet expectations, we prefer to let someone else take over.”
Hedging investment risk is common on the trading floor, and with today’s technology and liquid marketplaces like Acquire, you can do the same in entrepreneurship. Ship early and ship fast, argues Stan, and then you can exit before overcommitting yourself or your teams.
A Household of Entrepreneurs
Stan was born in Bulgaria into a family of entrepreneurs. After watching his loved ones build a successful promotional merchandise business, he vowed never to get a “real job.” Instead, he moved to the UK to study marketing before returning to collaborate with other entrepreneurs.
“I was raised by entrepreneurs. I have never worked for a company in my life. It’s just the way we live, but I didn’t work for the family business. Technology has always fascinated me, and I knew very early on that I wanted to help build software products.”
That fascination didn’t translate to the technical, however. Stan chose marketing because it was a better fit. He was a natural salesperson who loved talking with others. Besides, Bulgaria was saturated with engineers – he’d always find people to help him build products to sell.
“I graduated with a bachelor’s and then a master’s in marketing in the UK,” Stan said. “I returned to Bulgaria after graduating and met my cofounders here. We formed a small software development company, RAZORlabs, and began launching products to test our ideas.”
Stan’s cofounders were software engineers. Together, the goal was to build SaaS tools that Stan would market, earning a living through entrepreneurship rather than finding employment with other companies. They started with just four people and today have grown to ten.
Build Fast and Ask Questions Later
Stan and his team saw an opportunity in the note-taking app phenomenon. Many of these apps operated using the same hierarchical foldering system. Stan wanted to create a note-taking app that also linked customers’ ideas together, similar to the Zettelkasten Method1 of thinking.
It was a novel approach, but the market was crowded. Simpler apps with millions of dollars of funding were top-of-mind. And it wasn’t just the big household names: Copycats would clone any new and innovative product in weeks, increasing competition over time.
Stan wasn’t sure if they’d build fast enough to compete.
“Every day, a new copycat app appeared. We needed to move fast and test the idea to see if we could make it. Looking back, I think it would’ve been a very successful startup had we raised money. But at that time in 2020, we couldn’t do that due to Covid.”
Stan’s team had built Relanote’s MVP in just six weeks, launching it in early 2020. They’d funded development with other RAZORlabs’ projects, including a dark mode extension for Chrome called Night Eye. But now the coffers were running dry.
“Bootstrapping Relanote was too risky. Customers wanted new features, but we couldn’t afford the developer hours. We’d never raised money before and didn’t know how. The timing was bad with Covid. It was a tough decision, but in the end, we decided to sell Relanote.”
Get Acquired to Build More Businesses
Stan had never sold a business before, but he and his team agreed on the same goals. They wanted to recoup some of the development costs and ensure the buyer would support the app. They considered open-sourcing it but didn’t think that would sustain Relanote long-term.
“If we open-sourced it, it would just sit on the internet and nobody would care,” Stan said. But if someone is willing to bet their own money, they would do something with it. We never expected to recover all of our costs. It was more about finding someone who could do what we couldn’t.”
Before they listed, they prepared a pitch deck outlining the opportunity.
“I made a small presentation describing our tech stack and how much it costs to run the servers and domains and stuff like that. I wanted anyone reading the presentation, even if they weren’t interested, to understand Relanote, why we were selling, and how much it costs to operate.”
Stan believed in the product, but would buyers? He entered the acquisition process expecting it to take weeks to attract interest. The reality, however, was the opposite. As soon as they listed their startup on Acquire, his inbox began to fill up and vetting became a game of Tetris.
“I was surprised to get so many requests for information,” Stan said. “Many didn’t go anywhere after the first few interactions, but without Acquire, I’d never have been able to meet so many prospective buyers. It reassured me we’d eventually find a good fit for Relanote.”
Stan standardized his vetting process to help deal with the influx of queries. Of those that made it beyond introductions to virtual meetings, many dropped out of the running when they realized Relanote wouldn’t plug into their existing systems, stressing the need to vet buyers’ goals.
“Most of the buyers in our shortlist wanted to integrate a note-taking app into their systems as it was cheaper than building one,” Stan said. “Unfortunately, this wasn’t possible. We would’ve had to rewrite the app in a new programming language. These buyers quickly lost interest.”
In a quirk of fate, Relanote was eventually Acquired by one of its customers. In a few short meetings, Stan established the buyer was an avid user of note-taking apps and possessed the marketing expertise to grow Relanote without spending much more on development.
Selling to a Relanote customer was a possibility Stan had never expected.
“He was a project manager at some big tech firm in the US,” Stan said. “He adored note-taking apps and was a Relanote power user. After the acquisition, he planned to market the MVP heavier than we had and eventually develop the product once he’d increased revenue.”
Stan closed the acquisition using Escrow.com and everything from final negotiations to the transfer of assets was smooth.
“It took us three half-hour meetings in the span of one to two weeks because of the time difference. And I was traveling a bit at the time. Then the whole software transfer to their servers took us around one month, but it was a steady, slow, and refreshingly calm process.”
Entrepreneurs need the guts to make tough decisions, Stan argues. He doesn’t regret selling Relanote but wished he’d been able to raise funding to develop it a little further. Regardless of how well the business does in new hands, Stan’s proud to have learned when to exit.
“Who knows whether selling Relanote was the right decision in the long term,” Stan said. “But it was the right decision for us at that time. We couldn’t afford to scale it, couldn’t raise any capital, and the risks of bootstrapping were high. We chose to exit when the going was good.”
1https://zettelkasten.de/introduction/
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