A Silicon Valley Bootstrapper Tells All

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week special guest Sharon gillenwater lets us in on some dirty little secrets about Silicon Valley she's the founder of two businesses the first one was backed by venture capital and then destroyed by Venture Capital despite that experience Sharon tried to raise capital for her second business boardroom insiders a software is a service marketing tool that helps businesses sell to the top decision makers at Big corporations but this time the VCS weren't interested so she bootstrapped the business with the help of an angel investor and proceeded to learn some surprising lessons many of which she shares in her book scaling with soul perhaps the biggest surprise came when she sold her business and learned the happy lesson that the founder of a relatively small bootstrap business can walk away with considerably more money than the founder of a venture back business that sells for Far More in our convers Sharon is unusually candid about what it took to build her business what she learned about B2B marketing and precisely how much money she made along the way even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations will let owners know they are not alone in facing challenges in fact that's the whole idea behind the 21 hats Community engaging with other owners to get the kinds of insights only another entrepreneur can offer if you're interested in tapping the wisdom of this very impressive crowd step one is to sign up for the Morning Report which highlights the most important news of the day for business owners so you don't have to go looking for it step two is to get on our slack Channel just Google the 21 hats Morning Report to subscribe joining me this week on the podcast is Sharon gillenwater founder of boardroom insiders the episode is titled A Silicon Valley bootstrapper tells all before we get started I want to play part of an interview I did with Steve Baker who is a vice president with our sponsor the great game of business in this segment of our conversation I asked Steve how the great game especially in these crazy times helps businesses plan a year 3 years 5 years even 10 years out the technical part the nuts and bolts of planning for us are to literally do that say what will the economy do in the next uh one three five years we're even looking 10 years out to say what's possible we know the world breaks every 10 years we just don't know exactly when or exactly how but if we don't plan for it we're probably going to be a victim not a person positioned or an organization position to take advantage of it um uh what what I'm getting at here is we've got to look out far enough to say what's possible how would we attack that how would we get that market what do we do if there's a problem and then we are asking for people's buy into our plan rather than just dumping it on them do you actually at the great game of business encourage owners to get their employees involved in the actual planning and participating in coming up with the numbers and goals that the company then shoots for yeah good question the in the early days for anyone you're going to have to teach them there's no doubt about it but you don't have to teach them everything they don't have to become accountants or uh CFOs or even operations managers or anything like that to understand some of the things we've just got to start somewhere and with the ultimate goal of yes I do want High involvement because the higher the involvement the much more likely we are to hit our goals and Frankly Speaking we see some incredible forecast accuracy not necessarily in what products or services are offered over time but our 5-year forecasts are 97% accurate yeah Lauren the capture the wisdom of your team is so important the first story I heard at SRC all those years ago was the story about uh Jack was getting press in the early days for turning around this dying division of International Harvester and uh you know when he tells me this story I I just I can picture him you know cruising through the factory with his loafers and his Blazer you know and he's feeling good and U you know yeah good job everybody let's go imagine you're doing that you're cruising through the factory saying hi to people people checking on things you're just doing great and uh he sees the janitor pushing his broom he says yeah all this debt to equity equals job security stuff is crap Jack stops in his tracks he's like Dave what's wrong with you what are you talking about he goes well I happened to be looking at our financials and uh it looks like about 76% of our receivables are in the truck Market well I happen to know there's a there's a recession in the truck Market every seven years so it really doesn't matter if we do our jobs or not you're still going to lay us off and he kept pushing his broom you know and Jack is like wow what are you talking about and and think about it they had bought a dying division of International Harvester they had one customer International Harvester who was a financial disaster and they were so busy saving jobs that they hadn't looked out and so this was the first time where Jack like a captain of industry got his managers together and said did you know there's a a recession in the truck Market every seven years and we have 76% of our business tied up in one organiz you know and the point of the story is this they said well wait a minute the whole idea of of this business was to save jobs that's the what it was and and what are we talking about we're going to have to lay them off if if we hit a recession they said we are not Diversified so what they did is they looked out there and said okay uh at that point it was all the game was all about hours in the shop how many other products do we need to produce to offset these diesel engines that we would lose if there's a recession and they said well what goes up in a recession if everything else is down and they're like well car parts cuz people hang on to their cars longer okay let's do Automotive engines we're going to need four engines for every one of these it turns out Dave Skidmore the janitor was a burnout Merl Lynch [Music] broker you can read a text version of my entire interview with Steve at 21h hats.com and now on to Today's Show welcome Sharon it's great to have you here I don't often get to talk to Silicon Valley entrepreneurs uh you have a slightly unusual Silicon Valley story which is why I've been really looking forward to this conversation maybe you could start by telling us about your first experience with Venture Capital which came with a company you started during the doc bubble years sure um and I I'll just preface that by saying even though you know you you positioned me as a Silicon Valley Entre entrepreneur I feel like I'm only that by virtue of where I'm located I'm Cisco I never fit into that world or had access to that world or those resources and despite trying to break in um I was repeatedly shut out which didn't stop me but I just wanted to make that clear I'm not part of the In Crowd here at all which is exactly why I wanted to have this conversation with you I use that term only because I believe that's where you're based and and have been based yes that's true I'm right in the middle of San Francisco um and that was a really interesting place to be back in the late 90s during this big doc Boom the first major wave of um you know disruption uh driven by the internet and I did start a company in 1999 called fidget and uh I started that it was kind of a family Endeavor um with the help of my sister-in-law and my brother-in-law who both had a lot of executive experience and my sister-in-law was dabbling in the early internet and she was one of those early uh domain name speculators she bought up a bunch of domain names but at the time she was an executive at Sony and didn't have time to do anything so she had this idea for a a hub or portal for email newsletters which were really coming online in those days um and so she said you should go build it and so I did I she had the domain and I built that out it was a family business and you were kind of uh 20 years ahead of substack yes yes well it it was more um it was more email newsletters for entertainment we had our own branded newsletters but we started syndicating content from the print world so you could get Dear Abby every day and your email box or Miss Miss Manners or art buckwald and all those kind of old timey print columnists so uh we bootstrapped it for the first um six months or so and then it kind of fell into our lap this incubator based in Burbank that had a bunch of EX Disney people attached to it so they understand content and entertainment they offered us $3 million for a little over 50% of the company which was a great valuation and so we took it and another attractive thing about incubators is they do your accounting and your HR and your legal and all that stuff that's not core to your business that you may not have the expertise or interest in doing so it sounded like a great deal for us um when we raised it in April of 2000 the NASDAQ was already in freef Fall so we just thought we were so lucky to have been able to do this but the end that decision killed the company because when the crash lasted longer than was anticipated the CEO of the incubator was out and they brought in a new CEO who only wanted to focus on biotech companies which of course we were not and they ended up shutting down the company because they had a majority stake so there's the first red flag and they tried to get out of their contract by suing us for fraud and so we ended up settling with them but because we had started to make these big investments in like long-term server hosting contracts and office space and all these things we had to shut it all down because we could not afford those expenses without that three million so um it really killed the company because I know I could have bootstrapped that thing through the crash and it was an unfortunate lesson so when I started my second company in 2008 let me stop you there for one second you know the basic business model of a venture capital organization is to throw 10 11 12 companies against the wall and hope that one sticks and it to my mind it's not just that the other companies don't go on and flourish um but what gets lost in the conversation a lot I think is that many of them would in fact have done well if they had not taken Venture Capital which means I think you can make the argument that Venture Capital kind of by definition destroys more companies than it builds you seem to have had that experience do you think that were you unusual or is that common um that is a bold statement but I don't know that it's not true it might very well be true I don't think I have enough experience to know that that but what I do know and I've done a lot of Investigation into this is that bootstrapped Founders very often have much better exit outcomes than those who have raised venture capital and this is something that I didn't really understand until two years after I sold my own company um and how I discovered this is I had a viral video where I talked about how much money I made when I sold my company for 25 million you know how much I paid in fees how much I paid in taxes and how much I walked away with and that video went hugely viral and one of the audiences that showed great interest in the video were Venture capitalists and venture-backed entrepreneurs and at first I didn't understand it because I thought these are people you know I'm not in this Inner Circle why do they care about little old me and my little tiny 25 million exit which you know seems like small potatoes in Silicon Valley and it turned out after I started talking to people the reason why it captured everyone's imagination is because as a Founder you can raise 50 million and sell for 200 million you know so more than 10 or around 10 times as much as I did and walk away with a lot less money than I walked away with I want to come back to that viral video but let's go through the story uh tell us how you wound up starting your next business yeah so after um the disaster of fidget and I took some time to regroup and I had a second child in that time frame and I took a job after 911 because I was desperate uh you know the job market was had still not recovered from the dot bomb and then we had 911 after that and so um I took on a terrible job which it's kind of unbelievably hilarious but after that job I decided I worked there six months I I decided I'm never never working for anyone else again so I hung out my shingle as a consultant for whatever anybody wanted me to do I was good at writing and communicating and uh one of my former employees from my first job in the city contacted me and said hey I I'm I've started doing marketing Consulting for big Tech and I think you would be perfect at it and I said I don't know anything about that he said it's okay it's great you're going to be great and so we started uh we became a little Duo working for various agencies working for companies like Intel and Cisco and people soft Sun all the biggies and I started to develop this expertise in helping those companies effectively communicate with and engage the SE suite at their customers because Tech deals were getting bigger and bigger they were starting to attract the scrutiny of CFOs and Chief Information officers and even CEOs and these tech companies did not know how to approach and have conversations with those folks so I started coaching sales and marketing teams on this and before too long after a few years I was kind of the go-to person for this type of work how did that happen uh Sharon do they just come to you and say we're having trouble reaching the SE Suite can you help us or was it your idea that these companies were missing opportunity and you sold them on the idea it was both it was both the push and the pull and you know at the time I was really focused on highlevel events these companies spend Millions every year on trade shows and small Summits designed to attract higher level uh you know SE Suite players and svps and the like and they were having trouble getting people to come to these events and I could see why um because they were only talking about themselves basically um they weren't making it about the audience and um then I I did a whole research effort where I started interviewing people who worked for seite leaders and I even interviewed some cite players themselves to figure out what attracts them to an event like what are the events they go to and why and how do they evaluate all the invitations they receive because they do receive many and so I was able to create a body of research that says this is how you get seet people to your events this is what they want this is what you talk to them about and I developed um a point of view that it's really onetoone marketing if you want the chief marketing officer of Proctor and Gamble to come to your event you better make it a onetoone value proposition for him or her um and how you do that is you research them you learn about them you look for anything they've said public about what they're working on or what they've done in the past and you approach them and you say hey and by the way you have to have your CMO or your CEO approached them it can't be some salesperson you say hey I loved what you said about X Y and Z last year this really resonated with us because we're doing you know ABC we're having EV an event and we would love to have you come and um share your story so so it's it's a hard thing to do it's very time consuming but it pays off um you know everyone wants to just make everything super easy but it's not effective if you just send them blanket emails they're not going to respond to that but the core of it right to be effective is you have to know a lot about them so I developed this template for an executive profile that was you know like seven pages long very detailed very current and connecting the dots between company initiatives and that person's role so even if you didn't have them saying anything specific maybe they've never given an interview you might have the CEO saying about the marketing team like they're going to spend 80% of their budget this year on personalization uh initiatives right so that's something you can take to that CMO and say hey we saw your CEO said this our solution helps you it would help you do exactly that in fact your competitor is using it would you like to have a conversation well it's that person's job per the CEO to explore that so they almost can't say no to a request for a conversation from someone who says they can help them with that and so this is the kind of um Consulting that I was doing for a number of years and at some point I thought hm everyone is chasing the same 2500 people at these you know Fortune 5 00 companies what if I put these profiles in a database and sold a subscription to the database so that's how it started that's how Bard room Insider started and then it evolved and was enhanced over the years um but it I I started the company in 2008 and then we sold it in 2022 one of the things uh I enjoyed about your book is that it's it's nothing if not painfully um honest in certain ways uh you're the only entrepreneur I know know of who has I've seen compare uh his or herself to Elizabeth Holmes in terms of trying to fake it until you make it uh tell us about that yeah and by the way um one of my closest girlfriends read that and she said that is ridiculous you need to take that out of the book like you you're nothing like her you're not a fraud well the truth is you do did deliver um so that was different but you were figuring it out as you went correct I did deliver and I wasn't playing with uh the dollars of some of the most famous people in the world and I didn't have Henry Kissinger on my board but what I did do and what why I I did compare myself to Elizabeth Holmes is um you know when you create a database that has these incredibly detailed profiles that are very expensive to produce you can't just launch with a database of you know thousands of profiles because you can't afford it um so my early customers would find me on I find the website online and then they would contact me and it was just me at that point and some contractors and they'd say oh do you have a profile on this person and you know they couldn't see what I had and what I didn't have so I would just say oh yes I do um but you know what it hasn't been updated in a while so let me refresh that a little bit and can I get it to you tomorrow and then I would stay up all night completing it and then I would deliver it the next day and you know sometimes they wanted multiple profiles and I remember one time I think Lockheed Martin wanted these profiles and I you know my husband and I stayed up all night doing them I trained him to do them and he did a lot of the graphic stuff so that's what was happening and so it did remind me of Elizabeth Holmes because there was this story about how they would bring these visitors into the conference room and they would take a drop of their blood and put it in this machine that was in the conference room and then they would take for a building tour and someone from the lab would just race in and take it and take it back to the lab and manually complete the test and uh that's exactly what I was doing in the early days that left you with the challenge of figuring out kind of how to move from Consulting to making this a kind of a DIY uh project where someone can do the work themselves uh going into your database you wanted to scale the business and I believe this is the point where you you needed some money to start doing that and you had to think about what you would do to to raise money raise Capital to to build this uh scaled up version of what you were doing is that basically right yeah I I was making a really good living as a consultant um at at one point I had multiple people working for me although my clients didn't know I trained them to create these these Frameworks and Decks that I had developed and I would train them to do all the research but I would be the client facing person who would present all the work so I mean there were months I was making and this was back in like I don't know 2008 still you know because I kept doing that work for six years after I started the company I was bringing in like you know 35,000 a month or something with that and you know had to pay my contractors but the point is is I was taking money from my Consulting not only to live and support my family but I was using some of it to build boardroom insiders but there became a certain point when I had to really build out the database and it was very expensive to do that in those days it was actually more expensive than it would be now um and I needed money and I knew this personal friend who actually of my husband's who my husband had worked with and he had created a company and he had sold it and made a lot of money I have no idea how much but he was I knew he was loaded and he's a great businessman and so I talked to him about what I was doing and he was very intrigued because of the price point that I was getting for these profiles at the time I was getting like $1,000 a profile and he said you got to get those in a database and keep them updated he said even if you slash the price to 200 a profile that's huge and I said 'well I I don't have the money to build a database and he said ' I'll write you a check right now he said how about 125,000 for 10% and that's you know it was like a two-minute conversation and he wrote me a check and uh that was a huge motivator for me and I wonder if you know because I really didn't know what I was doing and I wonder if having that money was what made me keep going all those years I mean I think it really was um the more people you get involved in what you're doing the more you know the more is on the line and it for me it was a huge motivator so first it was taking this money from a personal friend and I was determined I wasn't going to lose it and then the second step was when I took on a partner who also had a family and then we've got two families depending on the business and then when you hire a team you've got more families and people depending on you to succeed so it was a real motivator did there come a point where you started thinking despite your original experience with Venture Capital at fidget that maybe venture capital is the way to finance this company too oh yeah I mean there were several uh inflection points where my partner and I wanted to tackle something and it costs more than we had in revenue and so we created a few decks over the years and Shop them around and nobody was interested um and I think we just weren't something that had a large enough Tam um for them to be interested or that large enough a total addressable Market I've learned all this stuff actually since I sold the company I did some research you know uh VCS are really only interested in companies that have a billion dollar in you know total addressable Market potential so you know we were kind of a niche product targeting a very high-end audience in Tech at the time like now the total addressable Market is more applicable to all sizes of tech companies and in fact the company which still exists has a lot of companies of all sizes but at the time it was really only the big tech companies that were experimenting with sea Lev engagement and this kind of onetoone um SE Suite selling so VCS aren't really interested in that and they're not interested in companies that have a lot of people doing the work which we had because of the type of information that we were providing it was absolutely Mission critical it had to be accurate and current we didn't do data scraping that which was the fashion at the time so we had a very contrarian production model and business model despite your first experience with fidget and with Venture Capital you were ready to take Venture Capital again with uh with your next business but nobody offered it is that right yeah we were cautiously considering it and we did talk to a few firms and you know they they just did declin to get involved for the reasons that I mention and then at a certain point in our business where we were consistently profitable and growing there emerged kind of these um groups targeting women entrepreneurs who would invest in women entrepreneurs but the numbers were too small at that point I mean if if you're if you're hitting a million dollars a year in revenue and you're still growing like 100 Grand isn't going to help you you know you need to raise a million right and so if you can't find that and you keep growing at some point you look around you you literally lift your head up and look around at your business and you say wait a minute why would I raise money now like we're doing really well we may not be able to grow as fast as we like because we can't invest as much money as as we ideally would like to do but it's not worth giving up a huge chunk of equity to accelerate that like let's just keep plugging along and so that's what we did what was the company like when you really hit your stride what was the high water mark and then how soon after that did you start thinking about selling it yeah the company really started to hit its stride in 2016 and that's when we hired our first employees was that 2016 or like like somewhere the end of 2016 early 2017 we actually started hiring people so from 2011 when I took on my partner to 2016 it was just the two of us and some contractors and that's you know that's a bootstrapping hack right there like don't hire your first employees until you absolutely have to right um You just use everyone as contractor so that you can scale up and back if you have a revenue issue and so that's when things really felt great um in 2016 I got an idea for a true SAS product that we could build on top of our database and I sketched it all out on a bunch of paper and then I put it in the closet for three years because we couldn't afford to build it but I had the plans for that ready to go it was just a matter of like getting enough Revenue so we could build that and so um 2017 2018 on it was just really exciting and fun because my partner and I were paying ourselves a reasonable amount still underpaying ourselves but we were paying ourselves a good amount we had a team so things weren't so chaotic for us we weren't having to do absolutely everything we had a great team that was very engaged and um you know focused on our customers which was fantastic and we were winning deals and we were winning deals with some of the biggest tech companies in the world you know Amazon web services Adobe Salesforce Cisco um I can't even remember them all but all the big ones were were coming across uh and we were closing deals with them and and that felt really good because we we were just this little tiny company and these companies were validating what we were doing and they they loved us um so we kept growing you know and then the pandemic hit and we thought that was going to kill us but it actually gave us another shot in the arm because if you think of what was happening in you know in the Fortune 500 they were trying to figure out how to not lose their customers their suppliers their Partners so CEOs instead of flying across the country to have two meetings they were sitting in their homes having 10 12 meetings a day and they needed Intel on those people they were meeting with and and at the same time the event marketers I talked about earlier you know they spend Millions on these events those were getting shut down so the marketers had tons of budget they needed to redeploy or lose it and so they gave it to us they gave some a little bit of it to us which was a winfall and so we doubled in size in 2020 both uh you know almost revenue and our team doubled in size how big did you get in terms of Revenue when we sold we were at 5 million AR R annual recurring Revenue yes annual recurring Revenue that's what the people who will acquire you really care about you know we had some Consulting Revenue as well because when you work with tech marketers you could have the most easy product to use ever but they still want you to do it for them and they want you to add a bunch of info and they want you to create decks for them and give them recommendations on how to engage people to the point where I was even writing emails coming from their CMO to an executive at their customer company saying here's the information on this person here's what your CMO needs to email to them so we had all kinds of these side things going on that brought in Revenue but when you're acquired all the buyer cares about is that annual recurring Revenue so uh that's very important to keep driving to that at all times so Sharon it's kind of sounds like you were living the dream you were having fun you your company was growing you had the team you you weren't working as hard as you had been previously your customers uh loved what you were doing why did you start thinking about selling because my partner and I were very worried about a tech crash we were heavily our customers were heavily you know concentrated in big Tech and when Tech crashes they all crash we had a team in Russia we never hired you know technology folks or Developers we outsourced all of that to a great team uh the company was based in Charlotte but our team was in Russia and there were Rumblings about uh you know Putin invading Ukraine and uh that could have really disrupted and in fact it did disrupt eventually after we sold and we also had not quite figured out some critical aspects of the business and we thought that that would come back and bite us eventually specifically we never built a solid and effective marketing funnel our customers came primarily from referrals and a few trade shows that we went to and um people moving from one company to the next and bringing us along so you know that's that's a double-edged sword right if your customers love you they keep renewing if they move to another company they bring you in they refer you to all their te that's all fantastic but you should have some kind of you know lead gen where you can predict how many of those leads will convert and into what kind of Revenue so that you can forecast your sales Pipeline and we never figured that out and we we tried and so we thought um that was going to come and bite us at some point you know when when times got tougher let me let me ask you about that Sharon didn't your own Services help you with marketing weren't you able to reach into Seau yes they did help us actually um they used to say you know we ate our own dog food they used to say that back in the 90s we had slack uh because we were a distributed team we were all over the place especially after the pandemic and so we had um a slack Channel where our editors who would read earnings call Trans scripts all day long would notice things that said oh this company is going to um they want to shorten their sales cycle and increase their deal size by engaging seite leaders at their customers well that's a sales trigger for us so our editors would paste that into a slack channel that was all about you know like Prospect Intel and so they paste it in the salesperson would run with it so we did do that ourselves and we got we closed deals that way too that's that's one way we were able to shorten the sales cycle for ourselves and and kind of fast track deals but um you know that was more episodic towards the end before we sold the company um I experimented with an initiative where I licensed a tool that collected an archived earnings transcripts and they had a very powerful keyword search feature so I would search for you know CIO engagement SE Suite selling and I found all kinds of companies that were talking about it on their earnings calls and you know I spent a good couple of weeks just pasting those leads into slack for our sales team all right so you you made the decision to sell how did you go about it there was one more thing that happened I mean we were thinking about all this stuff and we would worry about it my partner and I would go for drinks after work and talk about it like oh when's there going to be a crash like what should we do and one day we were um kind of heads down and I got a call from a private Equity Firm that I had spoken with a couple of times before and they had kind of kept saying well let let's see how where you are in six months type of thing and they called and they said well how are you doing and I said we're doing great we have a mammoth pipeline um going into 2023 and we're really excited so we're just keeping our heads down and they said well that's too bad because we could give you a term sheet for $48 million today and I was like whoa no one had ever put a number out there in any of these conversations cuz we had had quite a few conversations with private Equity firms and m&a bankers and nobody had ever put out a number and so I looked at my partner I said we've got to take this seriously and take a look at it so I ran out into the hallway without you know so my employees couldn't hear me and I called my angel who has done many of these deals and he told me they were full of that they were you know just throwing a number out there to get me excited and then they would hook us in and then they Chip Away Chip Away chip away till they got it way down to half of that and so he said look he said last time I talked to you Sharon you weren't considering selling like what's changed and I said well we're just worried about a crash we were attracted by this person throwing out a number and he said look if you're going to sell you need to hire a banker and run a process so I hung up the phone and I ran into my partner's office I said what's a banker and what's a process like I didn't know I don't have that background my my partner was a commercial Banker so he knew more than I did and so he said it's not that complicated it's like hiring a realtor except instead of selling your house they're selling your business and he said and you have the most to win or lose from this process so you need to run it and so I uh in May 2021 I set out to find a banker I talked to a dozen entrepreneurs who had sold their companies and learned from them and then we formally launched the process in September of 2021 and we sold the company in January of 2022 so it was pretty fast with some interesting twists and turns along the way what did you learn from that process oh boy I learned so much it's it's actually a shame I'm not going to do it again because I'd be much better at it the second time uh one thing I learned is you know as an entrepreneur you fall in love with your product and with your team and with your customers but really when you're going through the deal all anyone cares about are the numbers that's it I set up 50 logins for our product for the the acquiring company for some Consultants they had hired to kick the tires for you know the finance people I think two people logged in once it's almost like they didn't know what they were buying I mean I'm sure they did I'm not trying to knock the buyer at all but it just astonishes me because you know and I'd been told that it's all about the numbers it's all about the numbers it's about renewal rates it's about churn it's about deal size and growth and it really is because we they spent hours hours and hours and hours on the numbers and this the pipeline and the turn and you know determining the quality of the revenue and you know they throw out some Revenue because they don't deem it real and that's really all they care about so that's the first thing that I learned and another key takeaway I think is you know you hire your bankers and they are absolutely aligned with your interest because of the way they're compensated but there can come a time depending on what else they have on their plate that you get deprioritized and they're just trying to get you to agree to the deal and if that happens um and I'm not sure that's what happened in my case but I suspected it was happening you've got to grab the bull by the horns because this this is your financial future and you have to control the process and you have to tell them what you want and what's non-negotiable and that's what I had to do and I did it with the encouragement of my angel who was always you know having my back I would call him in these critical moments and he always clarified it for me and gave gave me the courage and the confidence to do what I thought needed to be done even though I'd never done this before you described that in the book and I I think what you're referring to with the priorities of the bankers is that you had reached a point where you were still negotiating details uh with with the buyer but those details were meaningful to you not to the banker and the banker had other deals your deal was probably relatively small compared to the other things they were working on and at that point they just wanted to get it closed yeah that's absolutely right I mean basically I got five million more than was offered because I pushed and I uh framed it in a way that I thought made a lot of sense um and I think you know the banker sure they were going to get more money but I knew from overhearing their conversations that they were working on like a $120 million deal so ours was at the time the offer was like 17 to 20 so they just wanted us off their plate I'm sure and I'm not faulting them for that that's a business decision that's valid but uh for me and my partner an extra 5 million is absolutely uh lifechanging right um and for our employees and everyone else who got paid the shareholders so I um I wrote the banker an email and I said I want you to go back to the buyer and say this exact thing because in the email I framed how at one point the buyer had said we have four other companies we've Acquired and your company is going to allow us to tie everything together and really have this very robust product in the people intelligence space and so I put that in the email you know if if we are the Lynch pin you should be willing to pay more and I asked for 50% more and I ended up getting 25% more than they had offered so that was huge and um it was very scary to do this because again I had never done this before I don't know a lot about deal making and I haven't done any deals and you know who am I to go up against these people who do these deals every day but um my angel and also my accountant uh gave me the courage to do it looking at those numbers with five million in Revenue I I don't know what your eBid was but selling for 25 million that seems like a pretty healthy multiple I guess you were able to do that for the reason you just described it was a strategic purchase for the buyer it was a strategic purchase and it was a very clean deal it was all cash and I didn't even realize at the time how great that is it's astonishing to me how I did all this stuff and it was only a year or two later that I understood and could reflect on exactly what I did and why and why it worked I I didn't know any of this while it was happening I was just kind of feeling my way through it but you know at the time multiples for SAS companies were like Sky High they were 7 to 12 and so you know my partner and I maintained this spreadsheet where we had done all the math of what we would get after tax both of us and after all the fees and we had all the different multiples you know across the top horizontal axis of the spreadsheet and we would just stare at it you know so we knew very well what we would be getting for different multiples and so you know we were offered I think a 4.2 multiple and we ended up getting five and it was low for the market but the company that was buying us it was a strategic deal which was great we also wanted a nice landing place for our team we didn't want our team to get thrown out but it was a public British company they don't do crazy multiples like they do in Silicon Valley they are very you know conservative and I also knew because they were public company at the time they're not anymore I could look and see what they paid for all those other companies those four companies before us I I read their earnings calls and I knew exactly what those multiples were and they were like one to two for the other companies so I felt really great that we got five um and uh I don't think this is in the book but I made a video about it one of the companies they bought before us had raised 120 million in venture capital and they bought them for a little over 7 million who so ouch wow so they bought they had bought a few distressed assets and we were absolutely not a distressed asset we were in great shape and so it was a different kind of deal for them and I think you know it was going to be a very valuable good acquisition for them given our product which if I do say so myself is amazing and then our team which was just stellar and I'd say more than half of those people are still with the company so there's a lot of twists and turns before you ultimately got the deal done and the the checks landed in your accounts there was one big surprise if I read correctly which is I believe you expected to go on running the business after the sale well I didn't expect it I knew that there was a very large possibility that we would be out I just was surprised at how quickly that happened and how late we found out about that um I was in South Carolina we were like a b Coastal company most of our team was in South Carolina and I was there with my partner the last two weeks before the deal closed trying to get everything done and my angel called me one night he just amazing because at the time you know he still is he's a public company CEO and he still would take time to be like what's going on because he just loves the deal making part right and this was like 8:00 on a Tuesday night what's going on I said well um we're supposed to close on Wednesday or something and we're supposed to close and he said do you have your employment agreements yet and I said no and he said you're not closing he's like he said either they don't know what they're doing or they don't want you and they're just not telling you or um they're just not ready and he said this is not going to close with without that he said what do your lawyers say and I said well they haven't mentioned it he's like that's shitty you need to call your lawyer right now so got on the phone with the lawyer nine o'clock at night and um they said oh yeah you probably should have those that was big oversight on their part which was irritating and um so the next day our lawyers really pushed it and that's when we found out that we were going to get Consulting agreements uh three months Consulting agreement so that was a shock and then what was even more of a shock is after the deal closed we were basically out within three weeks and even in the first week when we were transferring control I probably only worked like I don't know 10 or 15 hours like they knew what they were doing and they took over and transitioned the team very quickly did you care oh I did care it was so abrupt and you know I've been doing this for 14 years and I loved the team so much and I I was having a blast running the company with my partner for you know the last five years and um so it was very upsetting to me and I I cried for like a month but I couldn't tell anybody except my family because you know everyone's like well you just got millions of dollars what do you have to cry about but I'm motivated by a lot more than money um the money is fantastic and I needed that money to make myself financially whole as you probably read about in the book but um I loved what I was doing and so you know I'm still a little bit mourning it I still follow the company I'm like what's going on you know I have a couple people in there who I talk to every now and then and I'm thrilled to hear that it's been a great place for them to work and for them to land and for them to thrive so I'm very happy about that and I I know rationally that it was the right thing for them to um you know say goodbye to me and my partner because we were a little bit like Mom and Dad with our team um and you know they needed they needed to run the business the way they wanted to run the business so it was the right thing but it was a a painful separation process for sure and I felt very aimless for like a year now let's go back to that Tik Tock video what exactly did you share and why did you decide to share it well after I left the company you know I I started talking to people who maybe found me through Linkedin or referred to me through one of my contacts and and these were entrepreneurs early stage entrepreneurs who wanted my advice about something or other and the more I talk to people the more I realized that I knew a lot more than I thought I did and that it was a lot more useful to these folks than I thought it would be when you've been doing something for a long time and it's easy you just think like everybody knows it you know oh everybody knows this well they don't and if you talk to people you can provide a ton of value so that that's when I started thinking about the book and then I got on Tik Tok and the reason I got on Tik Tok is because I was trying to sell the book and no publisher would take me on they said you don't have a platform you know you need to have 20,000 followers or something like that and I had intentionally removed myself from most social media for you know obvious reasons and politics and all this misinformation that was going on and so now I found myself in a situation where I had to get back on and I met a woman who's written a book and and she said get on Tik Tok and I'm like what I said I thought that was just for dancing she said no there's a you said there's a lot of business content on there it's a fantastic medium for building an audience and so I got on Tik Tok I started making videos just like one to three minute videos on specific topics about entrepreneurship like how to validate your product how to find your product idea how to motivate your team and I was gaining followers but then um my son who's a genzer said you know what you've got to make he said you've got to make a video on how much money you walked away with because that's really what everyone wants to know and I thought that is so true because when my partner and I we'd hear about someone we know selling their company and we'd be like for days you'd be like how much do you think they got well and then you know we try to do the math and we'd be speculating but nobody would ever tell us and so I thought I've got to do this and it was very scary because I I basically made the video that said here's how much we sold for here's how much um we paid in fees to the bankers accountants lawyers here's how much we gave our employees here's how much the other shareholders got here much here's how much I paid with t in tax and here's how much I walked away with and so I made the video and then I didn't sleep for it was scheduled to send and I didn't sleep for like three nights worrying about it and then it went out and it kind of you know it did well but then maybe a month in it just exploded I was taking a walk with my husband and my dog on a Sunday and then my phone just started exploding I'm like what is going on and um a couple of venture capitalists had posted it uh who have huge followings and then so that was on a Sunday I think on the following Tuesday I got a text from a friend of mine and she said my daughter just saw you on Twitter and I thought oh no because I was off Twitter I I hated what was going on on Twitter I thought it was toxic and so I didn't post it on Twitter but not realizing that just because I don't post it on Twitter doesn't mean that someone else can't post it on Twitter so it got over a million views on Twitter and a ton of comments and I was so terrified to open the comments I made my son read them to make sure that I wouldn't you know terrified and that opened up a huge new world to me of people wanting me to come on podcasts or people wanting me to come to an event and speak or people wanting to me to you know formally consult with them so that did actually open up more opportunities that are generating a little bit of r Vue which is fun but most importantly and most enjoyably just meeting some amazing entrepreneurs that is made me um realize that even though the a lot of the most high-profile entrepreneurs are you know they do behave like the vast majority of the rank and file smaller scale entrepreneurs are amazing people who care about building great companies that serve customers and employees alike for our listeners who are not on Tik Tok can you tell us you you sold the business for 25 million how much did you end up with I got a little over 13 million and after all the taxes I walked away with about 9 million sounds pretty good to me yeah it was great you know it it's amazing just absolutely amazing and and you know I also made another video which was my second most viral video much to my shagrin because I like just threw on and old sweater that had cat hair all over it didn't my hair because one of the biggest questions people had was what are you spending the money on and so I made this video explaining that I've I actually spent like two million almost right away because I had what I called pent up expenses from years of underpaying myself because once that once I stopped Consulting you know and I was actually putting some of my Consulting money into the business I didn't save for retirement for 10 years I didn't invest in my home which was being Trashed by kids and dogs your kids I hope oh yeah well no sometimes it was other people's kids too but you know I I needed to completely redo my home uh my mother was going to move in with us who she's 86 and so we built an apartment for her we excavated our yard and redid that we paid off our mortgage there was a lot of money that went out the door right away and I still had plenty to live off of but I just explained that in the video and people are like well you don't owe people anything why do you explain it and it's like I'm explaining it to give a a real portrait of what you're signing up for when you're a bootstrapper and even you can have a great exit which I did but you're kind of making up for some lost time and income especially when you didn't start your company until you were 43 and you had two kids so um it's just it's real right people need to understand the reality of it and not just look at these success stories and make assumptions like oh you know everything's great you know now that's what was going on on Twitter that people were making assumptions about me and one of the biggest assumptions was that I must have already been Rich when I started the company because they couldn't understand why I didn't take this qualified it's called qsbs qualified small business stock exemption um and the reason I couldn't take it is because you have to be a C Corp and I was an escort and I did that on purpose because I didn't that's the only way I could afford to stay in the business in the beginning and my partner the same we needed those tax exemptions and benefits you get from being an escort to survive and stay in the business for the first you know eight years or so and uh so that's telling people that and having them understand that you can do it but you know there's some lost opportunities opportunity costs for the first however many years that's important that people understand do you mind saying how old you are now I am 59 I'm going to be 60 next year congratulations thank you you're still young enough to do this again if you want to uh do you know what you're going to do next well I am open to lots of different opportunities and I'm not trying to force things you know I'm just staying open and embracing opportunities that come to me that I'm interested in and what I'm learning is you know I I have two ways I could go I could go right into another startup although it's not going to be something that I found and as my idea because I just don't think I can do that again but if somebody else is working on something and it makes sense for me to become a partner I might do that um but the other route which I seem to be going more into right now is doing all these different kinds of thought leadership activities that add up to you know a compensated um way of spending your time you know I'm doing coaching I'm doing Tik Tock I I'm doing the book I'm doing events I'm doing speaking I'm about to launch a course this summer on bootstrapping secrets you know how to how to succeed without raising meture capital and I'm working on that right now it's um you know I don't tend to do things in a small way so it's a very comprehensive in-depth course on bootstrapping that I'm going to be launching on kajabi um and so I'm doing all the video and materials for that right now that's great well my thanks to you Sharon and to our sponsor the great game of business which helps businesses use an open book management system to build healthier companies you can learn more at Great game.com thanks everybody one thing before you go everything we do at 21 hats is created by entrepreneurs for entrepreneurs to help us all learn together so if you get something out of this podcast or out of the morning report please tell a friend tell an enemy tell every business owner you know Your Word of Mouth entrepreneur to entrepreneur will always be the most effective way to build this community for all of us thank you it means a lot this episode was produced by another entrepreneur Jess dubron founder of blank word Productions thanks for listening everyone