Learn more about Daniel Ch-
- https://twitter.com/chddaniel
- https://Simple.ink (Founder)
- https://www.emojics.com/ (Company Acquired)
Transcription
Andrew:
All right. I’m here with Daniel who recently Acquired a company for five figures and I’m excited to learn more. Thanks for joining me on this podcast.
Daniel:
Thank you for having me. It’s an honor, anytime to talk to your guests so, happy to be here.
Andrew:
Thanks, man. Well, my first question is, so there’s a lot of businesses on Acquire and this is a SaaS company I believe, and to kick things off, tell me about what attracted you to the business. What stood out, what made you feel like this was a business worth acquiring?
Daniel:
Yeah. Can I tell you first what put me in the mindset of acquiring something first?
Andrew:
Yeah.
Daniel:
There’s a bit of a story there. One of my main companies is a Notion website builder. And for those of you who don’t know, Notion is a big note taking app. And I started looking for separate products that I can Acquire to put under this brand, mailed a few people, and I found something that was, I believed, overpriced. This person was asking for beyond mid five figures. And I thought about it for a bit, and I thought it was overpriced. And then because I tasted the blood, I felt like getting more. So then I realized, “Oh, hold on a second, I’ve got my Acquire subscription.” I don’t want to make it so that, you know, when buy something, you only use it once. And then you forget about it.
Daniel:
I said, “I don’t get myself into that.” Because I bought it sometime ago. I love what you do, Andrew. And I wanted to support the mission and the vision, but this was a few months ago. So I remember that I have my Acquire subscription and I said, “Hmm, this didn’t go through because I’m not agreeing on the price with this seller who I found randomly online. Let me go look for the marketplace because I know all the listings there are vetted and all that.” So that’s how I got into this mood of looking for a business to Acquire. And I’m sorry, could you repeat the question? So what was it mainly? What made me look for this specifically?
Andrew:
Just what attracted you to this business? Because there’s 500 plus SaaS businesses on Acquire, probably like a thousand, but out of those, what made this one business really stick out to you? Why did you feel like this one was worth pursuing?
Daniel:
Initially I didn’t because I was looking to spend around those mid five figures and I thought this was, not below my budget, but below my needs. So initially I said, “Nah, this isn’t from me.” But then I started talking to the seller and they were very open. Full disclosure, to be transparent, this is the first time I’ve ever done this. And it is not like I have any background in PE or anything like that, so I just freestyle myself to it.
Daniel:
But because the seller looked very transparent beyond what I requested them to do, it built a lot of trust really fast. And then I started looking into the technicals, the metrics, the perks, because I feel like every business has some pros and cons. I really like the pros here. So to finally get to the answer, I like the fact that it was set and forget, I like the fact that it looked like it’s low churn` once people get through the value prop, I like the possible network effect and viral loop that might kick in, not at the number of customers has now, because those can look great on paper, but they’re just like a mirage early on. I believe after a number of users you get to unlock…
Andrew:
It’s a good business. I know the one that you Acquired. Can you give just a brief explanation of the company name, where you Acquired and what problem it solves?
Daniel:
Absolutely. It’s called Emojics, emojics.com. It’s an online feedback tool. As a customer, you embed it either on your website or in your emails and your users get a emoji scale. They use that to give you some feedback and you also do lead generation or email collection – let’s call it that. You do email collection through that as well. So feedback and email, that’s the two main problems it solves.
Andrew:
I really like that because it’s a very specific problem that a lot of companies could benefit from. Feedback and being able to have their customers have an easy way to send that feedback to you. So that’s awesome. So I guess my next question would be you locate the business, everything looks great, tell me more about what the buyer did that made you really comfortable. What could other sellers do to position themselves or increase their chances of being Acquired? If you had any advice there?
Daniel:
I’ll start with the practical info I have with the facts, and then I’ll give my opinion, which might or might not be too valuable because I’ve never sold anything, so don’t listen to me from that regard. What the seller did was immediately… I asked for a bit of info and they’ve given me access to Google analytics, to chart [inaudible 00:05:18] to Stripe. So I could instantly see through their guts, so to speak. I saw every transaction. Okay, they didn’t give me a bank statement in the first conversation, they did that later, by the way. But they just looked like they had nothing to hide. The message that came with this was, “Okay. They’re transparent. It comes from a place of, probably, confidence.” I tried to reciprocate on the other side by saying, “Look, I’m offering this price, but, here’s the big but, I’m promising a hassle-free as little headache as possible acquisition if this goes through. So unless I find something fishy I want to make it simple.”
Daniel:
So to get to your question’s answer, what sellers can do from my experience as a buyer is be transparent, but be careful. I guess it matters which mindset, which head space it comes from because I’ve seen some other buyers having their shield really high saying, “Why would I share all this stuff? You can just go and replicate my business, I guess.” If you think like that, maybe my advice won’t matter to you, won’t help you too much, but all this transparency build trust with me. I went and in and searched. I tried to be paranoid and I couldn’t find anything that made me say, “This is a deal breaker.” So I guess when you’re in due diligence, that’s what you do. You put your paranoid head on and you try and see if you can find anything that makes you say, “You know what? This isn’t actually as valuable as I thought it was because this, this and this.” Luckily I didn’t get into that situation, but that would be my number one answer as a piece of advice for buyers, sellers. Both, I guess.
Andrew:
Nice. I like that. I think one piece of advice I give to sellers is just understanding how important that first impression is. So as founders, I see a lot of sort of, “Yeah, we’re looking to sell, but like, what’s your offer?” But as a buyer, you’re looking at so many other businesses and to me that’s a yellow flag. It’s just, “Are you going to be really difficult to work with? Are you serious about selling your business? Am I going to put hours of my time into this and then it goes nowhere?” So the fact that the seller had all the information up front, was responsive, all those things, right there can dramatically increase your odds of being Acquired. So I like that.
Andrew:
Tell me about how you structured the deal. What were the terms? Are you comfortable sharing that? You don’t have to.
Daniel:
Yeah. I am. I’m just smiling because I might not be the best example. So I’m starting with this disclaimer. I just freestyled myself into it. So you and I, I mean you know him better than I do, Christian Friedland. I’ve listened to your podcast with him. I’ve been lucky enough to have him on my podcast. And I emailed him at one point on a separate matter, and I said, “You’re more of a Branson. You’re more of a Richard Branson type of person, so I’ll ask you.” So the reason why I smile is because I was more of a Branson move here. It was a lot of gut feeling. I checked as much as I could, but then again, I’m young. I don’t have how that much experience, so I had to rely on my gut feeling. But how did we structure the deal? Well, we looked at your tutorials, thank you for those by the way, we took your document templates and all that. I’ve gotten some advice, some counseling, some consultants help here and there. And the deal was all cash upfront because it just felt right given I think the business was undervalued and I believe the seller believed that as well.
Daniel:
Before starting this I said, “Okay, if they believe that as well, why don’t they just keep it?” I even asked. The person, “Why don’t you just keep it for this multiple, this yearly, multiple.” And it was because of personal reasons and this is the only thing I can’t really disclose because it’s their privacy.
Daniel:
So I put that aside and I said, “Okay. Believe, but go and find out for yourself.” Technically, financially, structurally, it also seemed fine. So, because I promised, and I know I was in competition as well, I know I had some other buyers right beside me on this specific company. I pretty much crunched through the numbers in those couple of weeks that this deal required, and all my headspace was just on this and that’s it. A hundred percent cash escrow, obviously not just bank transfer or something like that.
Daniel:
IS this what you meant when you asked, “How did we structure the deal?”
Andrew:
Yeah, exactly. And I guess my next question would be in terms of – you meet the buyer, you start… You have that first call and then you finish the deal. How long did it take you from finding the business, talking to the buyer to actually fully acquiring the business?
Daniel:
It was meant to take two weeks and I wouldn’t do it again, but over here, [crosstalk 00:10:35]
Andrew:
That’s like crunch time.
Daniel:
Yeah, it was meant to take two weeks, it took three because of some escrow problem, escrow.com wasn’t working with my TransferWise, which is now called Wise, US bank account. We settled for Epik, that’s with a K, epik.com. They have a registrar as well and their escrow service worked brilliantly. So it was only because of that. Otherwise we… so I sent LOI on day three of talking.
Andrew:
Who drafted the LOI?
Daniel:
You and your team because we took that template. But then with some consultants, I just made it fit our situation. So we started off of that, so thank you again for that.
Andrew:
And can you mention the escrow service you used again? The other one?
Daniel:
Yeah, Epik. That’s E P I K.com. They have multiple services. We just chose it because it was in your Facebook group, in the MicroAquire Facebook group. Many people recommend escrow, but it just didn’t work with our bank account. One other person mentioned Epik and the reason why I went with them was because this one person was saying, “Look, we had a slight problem, but the CEO reached out and helped us directly. I still have their email. They’re very nice.” And we knew it worked with TransferWise because we searched it. So that’s why. Epik.com.
Andrew:
That’s so awesome. I think that’s just the power of community today where you posted it in the Facebook Premium Buyer group and you actually got another recommendation. I haven’t heard of that escrow service provider, but I’ll definitely be checking it out.
Andrew:
So I guess probably the final question is what are the plans for the future? What are you looking to do with Emojic?
Daniel:
Yeah. Point number one of the plan is talk to Andrew Gazdecki and ask him, “Hey, how would you grow this?” If you don’t mind me, I’d love your answer on that one.
Andrew:
I’ll take another call with you for sure.
Daniel:
Well, number two is, and I’ll get number three to a more conventional answer. There’s this person on Twitter called [inaudible 00:12:47] it’s @ [inaudible 00:12:50]. And this guy, I follow him since April when he had like 10K followers. I know that in December last year or January last year, he had like 400 followers, something like that. Now he’s at 130K what I’m trying to do, and we’re making progress, is get him to partner up on this with equity, not as an employee or something, and team together on his marketing skills and see where this takes us. But, if that doesn’t go through, because this just came up in the last two weeks, if that doesn’t go through, and this is number three, the more conventional answer. I mean, look, I look at your tweets. They not only inspire me but they give me information. I realize through what you’re sharing that this has got quite a big time, total addressable market feedback [inaudible 00:13:46] how many feedback tours are out there.
Daniel:
We don’t need to dominate it or to get to a billion, something, whatever. So all we need to do is be there for some specific use cases. And some people just want emojis, not one out of 10 scales or something like that. And some people are going to search for that. I know how to do a tiny bit of search. In my main company, we reach three, four hundred thousand unique users a month through 95% [inaudible 00:14:16] so that’s not the number one outlier in the world, but it’s enough if we would get these many people in Emojics, some of them will convert. And that keeps on giving [inaudible 00:14:28]. Pair that with the probably low churn, set and forget long billing cycles, probably some small viral loops there. I think these can combine into something nice. So search number one, number two, I want to attach it to my name. So if either of my projects grow, this one will be dragged as well.
Andrew:
Yeah, it’s a nice add on product to kind of anything. One thing I’d recommend… do you want some Andrew tips off the top of my head?
Daniel:
I would love double that if that’s possible.
Andrew:
Number one, I’d see if you could maybe white label the tool or create some sort of affiliate program, because you can get really narrow on the customer and it might not be the sexiest customer. What I mean by that is maybe it’s on startups. Maybe it’s small businesses that just need a fun, interactive way, for their customers to give them feedback. And if you white label it, you can work with web design agencies. This is the go to market model for my first company business apps. So that’s one idea.
Andrew:
Two, I would definitely recommend building in public. I think just sharing that story brings so much attention, and then lots of the people reading that are going to be startup founders. So maybe they have a small project that could easily… Everyone needs feedback. You need to talk to customers.
Andrew:
So that’s one and then two, I would probably break out very specific use cases for very specific people. So the feedback that I’m going… This might not be good feedback so take it with a grain of salt, but if you figured out a way for dentists to use this, the use case for them is probably going to be a little bit different than say a startup or something like that. But like you said, the [inaudible 00:16:40] is big. Every business needs feedback from their customers. So I’d identify, and if you look at your current customers, you might have a cohort of customers that are very similar. And I would double down on those customers and maybe even create a separate landing page, like, “Feedback for startups,” or “Feedback for X, Y, Z customer that you keep seeing over and over”. But we’ll chat more about that later, but my mind was just kind of [inaudible 00:17:11]. So I thought I’d share that. I
Daniel:
I appreciate that. Yeah. It already has white labeling, I’m talking about the features, done and an affiliate program. They need to be taken forward. What you said about the vertical pages or the different landing pages, those are great ideas and I’ll be looking forward to exploring those, not just by thinking but by actually doing. So, thank you for the advice.
Andrew:
Yeah, my pleasure, I guess final questions would be, where do you want this thing to go in 12 months? That’s kind of a hard question to answer, but have you set any goal? I’m a big believer in goals where just write that on a big whiteboard and look at it every single day and those goals can be consistently marketing, it can be con consistently doing X, Y, Z, acquiring X, Y, Z, number of customers, it could grow it to this amount of revenue. What’s the main goal you hope to achieve? If in 12 months you look back and you’re able to say, “That was a success? What is that ?
Daniel:
I know what you say about the whiteboard. I’ve seen you post the Facebook screenshot of what you had in your office in Chico, if I’m not mistaken, in your first office. That you wrote something on your whiteboard and you kept looking at it, something like that.
Andrew:
No, the story behind that; so there was… It was a small office probably as big as this room that I’m doing this podcast in. And when we had these goals that we would set and when we hit a million in annual accruing revenue, I told my team we’d get a better office. Because we were literally like, I could touch you if… We were so close in the office. And we had another thing where I wouldn’t buy Red Bull for anybody because it was too expensive. So that was another goal. If we hit a million revenue, we had a new office and I’ll buy Red Bull for the company. What I did when we hit a million revenue is we basically left all furniture in the office. Literally the day it happened, we sell, we were like, “We did it.” And then I wrote [inaudible 00:19:30], which is, multiply that by 12 that’s a million in annual accruing revenue. I did it in Sharpie too, so it was just like, you can’t remove this. Yeah, I’m sure it’s obviously gone now. But yeah, goal setting is super important. We were laser focused on that goal and it helped us hit it.
Daniel:
Yeah. That’s interesting to answer your question. I wouldn’t think of it in 12 months, but I would say short to medium term.
Andrew:
I like that.
Daniel:
If, because I don’t want it to dawn upon me from above because I would rather have that happen in my… this is more like a side project. I’ve offloaded some capital that we were making from my other companies into this as a safety net. So I’m mentioning it because anybody listening to my take on it, take it for a grain of salt because this is my life situation. It is a safety net just in case a train hits and an airplane wrecks. And, I don’t know, the servers are destroyed from all my other businesses. I would rather start with this with a head start rather than from zero, but it would also be nice for Emojics to become a safety net for my platform of wealth. Hence my answer is, I’m looking to get it to 200K ARR, if this person [inaudible 00:20:48] is joining me, so a hundred each or a hundred K for, I’m going to say myself, but it’s actually ourselves, myself and my brother because we are partners. So either one or the two, this is, I know it doesn’t make sense mathematically, but this is what comes to mind in the short to medium term, get it to a hundred, two hundred K. Anything else that comes on top of that is just gravy. Am I using the right expression in English?
Andrew:
Yeah. Gravy. Yeah, I use it all the time.
Daniel:
It’s just a bonus. It’s just a bonus. If it gets to a million, sure, but that’s still gravy. For me, I’ll consider this acquisition successful once I get to that, if I get to that, number in annual recurring revenue and that seems yeah, go on.
Andrew:
Yeah. I like that. It’s always good to set realistic goals because if you don’t, you won’t reach them and then you’ll feel like you didn’t make any progress when you actually did.
Daniel:
And I also plan to be part-time if not less on this, of course, unless something urgent comes up, like maybe some customer support stuff, but it’s not my main thing for now. Who knows what will be there in a month or two, how my priorities change. But in this head space, this is the target. I should get a whiteboard now that I’m talking to you, put it up there.
Andrew:
Yeah, it’s helpful. I mean you look at it every day. It’s hard to… or another trick is you can just write down your goals on an image and then make it your laptop screensaver. We do that with our product roadmap, just so we’re super focused on what we’re building next.
Andrew:
This has been great, Daniel. Thanks so much for joining me on this podcast. I’ve got two last questions that I always ask everybody, and I’m sure I’ve asked you these in the past, but if you could meet one entrepreneur dead or alive, who would it be? And you can’t and you can’t say Elon Musk, because everyone says Elon Musk.
Daniel:
Or Steve Jobs.
Andrew:
Or Steve Jobs. You could say anybody.
Daniel:
I guess Henry Ford, the first… Maybe first not thinking too much about it, just the first thing that comes to mind.
Andrew:
Yeah, he was a trailblazer. I’ve actually been to… So I was born in Detroit. So I’ve been to his… his son has this huge mansion who’s obviously no longer alive, but you can go to Michigan and in Grosse Pointe, there’s the Ford Museum, and you see this sprawling estate and it just kind of gives you this like, “Wow, this family was wealthy.” Their daughter had their own house that was as big as a regular house as a playhouse. And they have a car garage with all the old Ford cars.
Daniel:
Yeah, that’s my answer for dead. But for alive, it would be, I now think about it Toto Wolff. If you’re watching Formula 1, he’s the team principal for the Mercedes team. I’d love to speak to him. He doesn’t seem very approachable, but I would really love to. If you give me that magic wand that I can pick anyone it’s him for alive.
Andrew:
Right on. What’s your favorite book?
Daniel:
The Power of Now, which is right… you can’t see it, but it is right here in my bookshelf.
Andrew:
Bookshelf.
Daniel:
Is like my Bible, I guess. I’m not religious, but if there’s anything resembling religion for me is that, which, the Power of Now is, in short, in less than a sentence, Buddhism adapted for the Western society, the Western world.
Andrew:
Interesting.
Daniel:
The Power of Now. Yeah.
Andrew:
Power of Now. I haven’t read that book. I’ll definitely check that. I’m an avid reader and I think one of the biggest skill sets entrepreneurs can adopt is just to always be learning. Always be absorbing knowledge. That’s awesome.
Daniel:
If you try it, give it 10, 30 pages. If it doesn’t catch you, drop it. It’s not the right time. But it’s the kind of book you can pick up and just drop if it doesn’t catch you. That’s my answer for favorite book.
Andrew:
I like those answers.
Andrew:
Well, Daniel, thank you so much for coming onto this podcast.
Daniel:
Can I plug something before I leave?
Andrew:
Yeah. Plug away. Plug away.
Daniel:
When I made this acquisition, I announced it, I mean a bit before, I said, “I want to make a podcast where I share everything; all the numbers, monthly spreadsheet with revenue, number of users, [inaudible 00:25:23] TV, whatever, even my ROI percentage, so how far I am from getting my money back,” and you and I chatted on Twitter a bit. I was looking for a name and you said, “I would call it Acquired, but I’m obviously biased.” And I said, “I would do it if you don’t sue me.” So that’s the name of it- Acquired. You can find it on my Twitter profile @chddaniel. If what I mentioned so far, which is just the beginning of the story, sounds at least a bit interesting. It’s free. It’s also got a paid side, but most of the time it’s free for all the episodes I’m going to share there.
Daniel:
I’ll just be sending updates, at least a monthly update with the numbers and stuff like, “Hey, here are all the, I think that would be an interesting one, here are all the doubts I have about this seller and all the ways I thought of through which he can screw me. Find out in the next episode, if he did screw me or not. I don’t think so, but if he did, if I find out in two months that he did, I’ll share it there besides all the numbers and all that.” So Acquired, the podcast, if this sounds interesting and you want to tag along.
Andrew:
Yeah, no, I gave you my blessing on that name. I love it. Definitely share it in the Acquire Premium Buyer Facebook group, and I’ll do what I can to support it.
Andrew:
Daniel, rooting for you, man. Thanks for joining me on this podcast. I really enjoyed the conversation.
Daniel:
I appreciate it, likewise. And you keep doing you Andrew, because you’re doing great things. Thank you for having me.
Andrew:
Thanks man. I appreciate it. Cheers.
