Ep. 291 – Buying and Selling Startups on MicroAcquire with Andrew Gazdecki, Founder

Ep. 291 – Buying and Selling Startups on MicroAcquire with Andrew Gazdecki, Founder

On this week’s episode of Inside Outside Innovation, we sit down with Andrew Gazdecki, Founder of MicroAcquire and Author of the new book Getting Acquired: How I Built and Sold My SaaS Startup. Andrew, and I talk about his entrepreneurial journey building MicroAcquire, and some of the insights he’s seeing when it comes to buying and selling startups.

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Interview Transcript with Andrew Gazdecki, Founder of MicroAcquire 

Brian Ardinger: Welcome to another episode of Inside Outside Innovation. I’m your host, Brian Ardinger. And as always, we have another amazing guest. Today, we have Andrew Gazdecki who is the founder of MicroAcquire. And Author of the new book Getting Acquired: How I Built and Sold My SaaS Startup. Welcome Andrew.

Andrew Gazdecki who is the founder of MicroAcquire. And Author of Getting Acquired: How I Built and Sold My SaaS StartupAndrew Gazdecki: Thanks so much for having me, Brian. I’m excited.

Brian Ardinger: I’ve got my MicroAcquire socks on. So, thank you for that. I’m super excited to have you on to talk about the craziness that is the startup world. And you’ve had a front row seat for a number of years as a multi-founder. And now with MicroAcquire, let’s talk about what MicroAcquire is and how you got into the business of helping startups sell to other folks.

Andrew Gazdecki: MicroAcquire, for those who aren’t familiar with it, is the largest startup acquisition marketplace in the world today. We have about 150,000 buyers registered. We’ve helped over six hundred startups to get acquired that combined acquisition total is 400 million at this point. Almost half a billion. We don’t charge any fees. So, you can sell your business on MicroAcquire completely free.

So, I started that business, candidly, as a side project. I just felt that needed to exist. I’d previously gone through two acquisitions, and it was just a mess. Everything from finding the buyers to, there’s so much education today on how to grow your business. How to learn sales. How to recruit. And how to fundraise. But then there’s nothing on the exit. Which is arguably the most important part of the founder’s journey.

Andrew Gazdecki who is the founder of MicroAcquire. And Author of Getting Acquired: How I Built and Sold My SaaS StartupAnd when I sold my first business, which we can talk about, if you’d like, it was a business called Business Apps. Spelled BiznessApps, and kind of the light bulb moment went on when I sold it. I just got a ton of emails and texts from friends that we’re also running startups and they were like, how’d you get acquired?

Like, how did you find the buyer? What was the process like? It was like hieroglyphics everyone. Including myself when I went through the process. So, what we’re really trying to do at MicroAcquire is democratize startup acquisitions and just make the process easier and more transparent for founders. And also, buyers.

Brian Ardinger: So, talk a little bit about the types of startups that are being bought and sold on the platform. And how has that maybe changed since when you first launched?

Andrew Gazdecki: Well, when we first launched, lots of small startups, you know ranging from, we would sell business, and we still do today, but 5k startups, mostly side projects. And since then, we’ve really expanded, I guess, up market. So, our largest acquisition is just under $10 million.

We have buyers on the platform now that can facilitate acquisitions in the hundreds of millions if the value is there. Yeah, just started with humble beginnings just because I felt this was something that was so needed for the startup ecosystem. Because the other routes to sell your business, unless you’re most founders think like Google shows up with a check and hey, you did it. Like you won the lottery.

There’s this saying most startups are bought, not sold and that’s just not true. You know, you really need to sell your business. And so, the other routes were expensive, borderline highway robbery, and that’s, that was really kind of like the main purpose of me launching MicroAcquire to really give another option for founders of this other business.

And if you’re curious about the other options, you can hire an investment banker. They’re going to charge a big fee. If your startup is too small for an investment bank, because most investment banks will only work with you if your business is of a certain size. And you know, maybe you can get like eight, nine figure exit. I had previously worked with an investment bank. And their minimum fee was $800,000 for a successful transaction.

The short story there, we got a few offers, but the fee was just, I still had gas in the tank, so I kept going. But it showed me, and I remember telling the bankers, I was like, you guys have the coolest job in the world. I do all this work. And then at the end, you come in and get, you know, a nice payday. So that always kind of stuck with me.

And then I stumbled on to business brokers. Business brokers, if your business is doing let’s say less than you know 5 million in revenue. You can work with a business broker. They will typically charge 10 to 15% commission to sell your business. So, 10% to 15%. That’s like a small angel round. So, I just saw it. Okay. Business brokers don’t do too much. You know, what would happen if we removed the middleman? And we let buyers and sellers connect directly.

And we help businesses ranging from SaaS companies. That’s kind of our sole focus. But we also sell a lot of e-commerce businesses. Communities. Some crypto companies. Direct to consumer. Newsletters. We like to say, we want to be the marketplace for profitable startups. So that’s mainly our focus is startups that have traction.

So, we don’t list startups that are pre revenue. Content websites. Affiliate websites. Again, mostly focusing on businesses that have, you know, a lot of growth upside. Having a blast running it at the same time, too.

Brian Ardinger: I’m hearing more and more about people using the platform, startup founders, maybe looking to buy a side project or a side hustle versus building something from scratch. Are you seeing that trend happening?

Andrew Gazdecki: Yeah. Like one story that comes to mind is, there’s builders and there’s scalers. Where a lot of people love to build a business. They love to think of a new idea and bring something to life. And I think fallen, in both those buckets. Builders and scalers. And so people build these wonderful businesses, but they maybe build it to a certain point where they’d like to move on to something else.

Maybe they built it to a few million in revenue and now they’re, you know, mostly managing. When they’d really like to be building. And so MicroAcquire is a great outlet for them to meet buyers within like hours. Like the fastest acquisition on my group, where I was within, quite literally hours. Those are obviously outliers.

Brian Ardinger: What are you seeing when it comes to valuation trends and things along those lines? How’s the market changed or what shifts are you seeing?

Andrew Gazdecki: Yeah, good question. It really depends on the business. So, a good business will always trade at really good multiples. SaaS trades at high multiples and e-commerce. Newsletters communities also trade lower than, you know, a typical SaaS business.

So, there’s so much variability. And when I get asked questions like I have a SaaS company, it’s doing a million revenue. What’s it worth. That’s kind of akin to asking what a car is worth. You know, like, is there a 500,000 miles on it? Does it need a new transmission? Do you have a good team in place? What is your churn? What is the quality of your customers?

And then other little things like when you go to sell your business, do you have an understanding of kind of what your business is worth? And on MicroAcquire, we have two different things that we do to help with valuations. One is we have a directory within MicroAcquire where you can hire someone to get a real valuation done.

I highly recommend that. And then we also have a tool called MicroMRR. And you should go to micromrr.com and you connect your Stripe billing. We’ll actually give you a data-driven valuation based on what we’re seeing from acquisitions happening in the market. So, acquisitions are a moving target. I’d say maybe there could be a slowdown coming.

I know the public markets for trading believe like 22X, and then they dropped down to 12X and this is April. Those might climb back. But the last year was absolutely borderline bonkers in terms of. It was record numbers in terms of private equity activity. Just MNA activity in general. So, it’s a good time to sell your business if you’re looking to.

Brian Ardinger: I’d love to hear a little bit more about how you came to create MicroAcquire. I mean, I know early on you even did some interesting marketing. Went viral. You had the Russ Hanneman character from Silicon Valley TV show, do a little viral stuff on Twitter. Talking about MicroAquire and that. Can you talk a little bit about your idea of how you got it started and the execution to get MicroAcquire off the ground?

Andrew Gazdecki: Honest answer is, so I like to work within a frame. I’m not a big fan of like mental frameworks. That, you know, maybe other people put forth. But so, I’m always thinking of what worked five years ago or what worked 10 years ago does not work today. And so that’s why you’ll see, I’m always trying to market in a way that doesn’t feel like marketing. But it also adds value and maybe even makes you laugh and stuff like that.

A lot of startups today think that their main competitor is XYZ company. But it’s really the 500,000 startups out there. So, you’re competing for consumer attention. I’m a big believer in that. And so, we focus a lot on brand-building. Just sharing MicroAcquire story. Kind of everything.
So, when I first launched it, I was working probably like 4:00 AM to like midnight. And the only way, so going back to kind of like how I think about and what I recommend founders think about when they first launch a startup is this won’t come as a surprise. But find something you’re passionate about. So, and then also find something that you have a unique insight into.

So, I made a bet that entrepreneurship through acquisition was going to be a trend. And that was just through me going through two different acquisitions. I was actually looking to buy a SaaS company. And I couldn’t find anything that was specific to SaaS. I didn’t like working with brokers. I wanted to speak directly to the founder because it’s a very relationship type transaction. And it’s not just here’s the keys.

You know, I want to know about the founder. I want to know why are they looking to sell? And so, I kind of just created what I feel acquisition should be. And I kind of built MicroAcquire in a way that thinking back on Bizness Apps is a 10 million a year revenue company. What would it take for me to list on a marketplace?

So, we implemented things like privacy ability to connect. Financial metrics. You give buyer a good, healthy snapshot into the view of your business. To get it off the ground, I mean, a lot of podcasts. A lot of cold emails. Hanging out on live chat, 24 7. And I don’t recommend this to founders, but again, going back to my previous point is before I launched MicroAcquire, I wrote down, what customer do I want to serve?

And I’ve been an entrepreneur my whole life. I love startups. And kind of a startup nerd. I love looking at new businesses. And I built this company. And so when I work on it kind of feels like a video game. It’s not work. And if you can put yourself in that situation with some unique insights into a market. It’s a customer that you love. And then unique insights kind of fall in line with what I describe as founder market fit. So why you. So, I think of why now. Why you. As probably the two most important things.

I had a deep conviction that acquisitions are going to be increasing. And that proved to be right. So that was a non-obvious bet to a lot of people, but obvious to me. That became obvious over time. But when you’re able to build a startup in a way that you enjoy playing, running, whatever you want to describe it. More than your favorite video game. You kind of want, cause it’s really hard to compete against a founder that where it feels like work.

My best analogy there is if you, I see a lot of founders creating startups around what I’d call like opportunistic opportunities. Where, you know, it’s a good idea, but maybe you build a CRM for dentists. But you hate dentists. And a big part of building a startup is talking to customers all the time. I’m a big believer that your customers have path to product market fit. They have a better roadmap than you do.

And so, you need to be able to talk to these customers and enjoy these conversations and really listen to them. Otherwise, there’s someone out there who’s going to love those conversations and it’s just going to be really hard to compete. But it all kind of revolves around happiness. Where the founders that I think go the distance really enjoy what they do day in day out.

And that’s not to say it’s super easy. Like just cause it’s fun, it’s easy. Like a video game. Just because it’s fun doesn’t mean it’s easy. I think that’s kind of the key that a lot of the founders should be thinking about is, is this a business I could run for a decade? If so, why? And kind of dip your toes in the water.

Like when I launched my group, I didn’t have grandiose visions for it. I just wanted to help other founders get acquired without these huge commissions. And then as the business grew, it became pretty obvious that the market opportunity was fairly large. Yeah, basically kind of grew forth. I knew this was something that the startup community needed, and I just worked.

I was doing customer support. Vetting the listings. Writing the newsletters. Managing the product. Going on podcasts like this. Social media content. In a weird way, and now I have a team that helps me with all that stuff, but in a weird way, I kind of look back and I miss those days.

Brian Ardinger: Well, it’s never really been a better time to be an entrepreneur because you have a lot of these new No-code tools. And ways to spin up experiments. Like you said, dip your toe in the water. And you have access to a lot more information. You know, I think 10 to 15 years ago, the whole VC world was not very transparent. But now, you know, you can read blogs and books and figure out that particular path if you’re an entrepreneur.

It sounds like you’re trying to do the same thing for on the acquisition side. Breathe some life into what that path looks like and that. So, let’s talk a little bit about the book you just wrote, Getting Acquired: How I Built and Sold my SaaS Startup. What can people expect to find in it? And why did you write the book?

Andrew Gazdecki: I started BiznessApps again, spoke B I Z N E S S apps. My mom, this is kind of a funny footnote, but everyone called it BizApps. So, I ended up chasing down owner of the domain, BizApps. When your mom calls your business BizApp, and you don’t have the domain, you got to go get it.

But I started that business when I was 21 in college. And also going back to unique insights. I had a previous business that helped mobile developers connect to businesses. So, I saw businesses posting the same job requirement over and over and over. And I thought, whoa, they’re paying like 50K to 100K for like a project like this?

What if I just built a template and the functionality isn’t really changed too much. But we just changed the content. Imagery. Which speeds up mobile app creation. Makes it more affordable. There’s do yourself website builders at the time. And I thought, what about a do yourself mobile app builder for small businesses?

So, the book is just kind of my story. I just journaled through the whole experience because it was very strange and surreal. I was 21 when I launched it. Just to give you kind of an idea of like the growth of it. And it was a right place, right time business. I got completely lucky. The iPhone had just come out. Android wasn’t even there. Blackberry was still in the mix. We almost made a Blackberry app. I’m glad we didn’t.

But it’s just my candid experience building that company, from idea all the way to the invested. So, it’s not a book of here’s how to build a startup. It’s more of a book of here’s how I built a startup with mistakes. Everything from when I thought of the idea to when I sold the business and everything in between.

Brian Ardinger: Can you highlight some of the best or worst advice that you got on that journey.

Andrew Gazdecki: I was so young. So, I was 23, 24, and I personally didn’t grow up with too much means if you will. And so, I remember there’s a specific situation. We needed a marketing hire. And I was handling most of the marketing. And the salary ranges, now I’m two years out of college and they were in like the 150K, 200K range.

I’m like, what am I going to pay someone that. Like you really need, one of my favorite quotes is, you know, talent wins games, but teamwork when championships. It’s a Michael Jordan quote. So, I think, you know, hiring smarter people than me, was probably my biggest mistake.

Also, a funny story. This is a true story. We had a period where we were again, because we didn’t hire a really good marketer that could track in our paid ad spend and stuff like that. We were spending over a hundred thousand a month on Google ads. The business grew from zero to let’s call it 7 million in the first five years. So it was just, everything was just kind of like, don’t touch anything. We don’t know what’s working. But it’s working.

And it was so profitable. Our customer payback period was like 33 days. And for the first two years, our margins were about 90%. So, it was just extremely profitable. But when we finally hired someone to do analysis on how profitable is this pay-per-click ad campaign, we concluded basically we were burning about 90,000 out of that a hundred thousand. So, we call that era blowing up Ferrari’s every month.

So, every month we were blowing $90,000 because we weren’t properly attributing our marketing spend to customer acquisition. And blowing up a Ferrari every month probably would have been cooler. Maybe not that would have hurt my heart because I’m a big car fan. But and I share all of that. I share the ups and the downs. And I think it’s just a candid story of just what it’s like to build a startup. Mistakes and wins included.

Brian Ardinger: So, looking at the world today, what are some of the resources that you would recommend that startup founders be checking out or paying attention to?

Andrew Gazdecki: I get a lot of really good insight just talking to other startup founders. I’m not a big podcast listener. I read a lot. Like this was kind of some books I’m reading and there’s my book on top, like Play Bigger. It’s a book about brand-building. From Impossible to Inevitable, that’s a great book on how to build a SaaS company end to end. It goes over marketing, building a sales team, just written by Jason Lampkin and Aaron Ross from Predictable Revenue.

And then a Tuned In, which is basically how to listen to customers. You know, you can talk to customers. But how do you really listen and get the insights you need? So, I always say that customers have a way better roadmap to product market fit than you. You just need to talk to them and listen.

So, I could give you a number of different books, but I’m an avid reader. That’s kind of where I get a lot, but I will say you definitely learn the most when you launch a startup. When you kind of just, you can read all the books in the world, but when you finally launch a startup, that’s when the real learning begins.

And also like you kind of get in a situation of, I launched a startup. Okay, now I really need to figure out marketing. And so now you’re very motivated to figure out marketing and apply some of the concepts that’s right, that you might read in some of these books.

Brian Ardinger: That’s great advice. And I encourage anybody who’s even thinking about it. The tools and the resources are out there to try things nowadays that maybe you couldn’t have tried in the past. Even if you fail, you’ve probably leveled up your skills and game considerably than if you just read about it. So, encourage is that as well. My last question is what are you most excited about working on the next three to six months?

Andrew Gazdecki: I’d say just helping startups and founders get acquired. We have a goal to help a thousand startups, get acquired this year. So far, we’re on track for that. We average about 100 a month. So, we’ll probably beat that goal. And what’s interesting about startups and you start something, and it goes really slow, but stick with it. And then kind of takes off because we’ve done more acquisitions this year alone than we did in the first two years of being in business.

So, what gets me excited is just helping founders. And we’re building tooling to help acquisitions. To really streamline them and really educate founders on what is due diligence. What are the legal steps? How do I transfer assets? How do I do technical due diligence on code if I’m looking to acquire a business and how does escrow work? What are common deal terms?

So, if you go to MicroAcquire, click resources at the top. You can literally learn how to acquire a 100-million-dollar business. We have so much content. And that’s just kind of like something I felt was so needed because it’s such an opaque topic that not too many people write about. So, I definitely recommend checking that out.

For More Information

Brian Ardinger: Andrew, I want to thank you for coming on Inside Outside Innovation. And sharing these stories and giving us some insights and access to some of these resources. I think it’s very valuable. I really do appreciate your time. If people want to find out more about yourself or more about MicroAcquire or the book, what’s the best way to do that?

Andrew Gazdecki: Definitely check out MicroAcquire.com. It’s free to sign up. You can browse the startups. And then as a seller if you’re looking to sell your business also completely free. You can list your startup. And instantly meet buyers. Sometimes within hours of going live. We do vet all listings. So, we have a process where we work. And we make sure that you are prepared when you go live on MicroAcquire. But follow me on Twitter, @agazdecki if you can spell that. Or just add me on LinkedIn.

Brian Ardinger: Excellent. Well, thank you again for being on the show. And looking forward to staying connected.

Andrew Gazdecki: Yeah. Thanks for having me.

Brian Ardinger: That’s it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.

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Episode 291

Ep. 291 – Buying and Sel...