Rob Walling on Life After Acquisition
Today, on the Early-Stage Founder Show, I’m talking with Rob Walling, whose resume is hard to cover in this short intro, but I’ll do my best. He was most recently the founder of Drip, a lightweight marketing automation tool that was acquired by LeadPages in 2016.
Before that, he bought, grew, and sold the keyword tool HitTail, is a co-founder of FounderCafe, an online community of entrepreneurs helping each other succeed, author of Start Small, Stay Small, co-host of the Startups for the Rest of Us podcast, and co-founder of MicroConf, the world’s biggest conference for the world’s smallest self-funded software companies. He also has bought and sold many, many other smaller apps and websites along the way.
If you couldn’t tell, Rob embodies the term prolific when it comes to building companies and sharing his knowledge, and is one of the driving forces behind the self-funded startup movement.
Since Rob is so prolific, I wanted to focus on something he hasn’t talked about as much: what happens after you sell your company. In most cases, you don’t ride off into the sunset with bags of money. In fact, you almost always are required to stay onboard, sometimes for up to 3 years.
In this interview today, Rob shares what the post-acquisition transition was like, what could have made everything easier in hindsight, and his advice for founders who see an exit in their future.
I’ve looked up to Rob ever since I read Start Small, Stay Small years ago, so having him on the show was a real treat for me, but I think this is an episode you’ll get a lot out of as well.
00:20: Rob describes how he was approached more and more by VCs, but never really planned to sell
04:11: The decision to sell was only finally made two weeks out
08:04: A focus on less stress might have been the only thing that would have made the acquisition work even better than it did
12:10: Going from founder to employee didn’t feel like a big change at Leadpages
14:56: You always know a Silicon Valley acquisition means you’re staying on for three or four years
17:20: Day one didn’t bring anything new except the names on the paperwork – that’s when the changeover really just started
21:03: Transferring knowledge to the acquiring company happened slowly, by pairing and shadowing
23:52: Rob says he would have been less precious about letting go of small things that actually don’t matter, or that other people can do better than he can
27:54: Advice for people who may at some point in the future go down the acquisition-as-an-exit path: don’t have several companies entangled by paperwork and umbrella corps.
- 30:13: Too much time right now spent on on
- 30:33: Not enough time right now spent on
- 30:42: Aim for next quarter
- 30:55: Any roadblocks that could stop you getting there
- 32:05: Long-term vision for Drip
Where to learn more:
To hear more from Rob, check out the Startups for the Rest of Us Podcast. There are over 300 episodes there, so no matter where you're at in your business, funded or not, there is something for you to learn.
If you want to hear more about the specifics of the acquisition and everything leading up to it, here are 4 podcasts I recommend:
- A Startup Acquisition Story
- The Other Side of the Story: An Interview with Clay Collins of Leadpages
- The Family Side of A Startup Acquisition: Part 1
- The Family Side of A Startup Acquisition: Part 2
ANDY: Rob, thanks so much for joining us today.
ROB: It’s my pleasure, sir.
ANDY: So, you’ve had what seems like dozens of businesses over the years, and at MicroConf a couple years back you talked about leveling-up and always trying to build something bigger with each new challenge that you took on, and so when you started building Drip, did you have some sort of strategic acquisition like this in mind as your ultimate exit?
ROB: I did not. The goal when I started to drip was I wanted to build something bigger than my previous effort, and I was thinking I've kind of come up with my own internal 10x Rule, and so I was doing a lot of businesses that we're doing, let's see, $1k to $10k a mont, and when I acquired HitTail I grew that up to about $30k, and that was, you know, it was 10x $3k, so that was kind of like, ‘Oh, this is a really, really good milestone to hit.’ But then stuff happened with HitTail. I didn’t sell it until 6 or 8 months ago [0:00:54] but ooh, sorry, I stumbled on that. The idea with Drip was I wanted to do something like 10x bigger, in theory, than HitTail, but the idea of an acquisition was not at all on my roadmap, especially in the early days.
ANDY: Was it ultimately just… were you even thinking about an exit, or a potential end-goal, or was it just trying to build something that was ten times bigger than what the last project was?
ROB: I was genuinely not thinking about an ex it. I was thinking about building something big that would be a profitable business, that would be a great, you know, ‘lifestyle business’ that could employ 10 people, and we could hang out and have a great startup. The first time I even considered an acquisition was we were… I forget how far in we were – 18 months? Maybe two years? – and A) you know, it’s a long road to do this, and so in the back of my mind I was like, ‘Well, I don’t know if I’d consider it,’ and then we started getting offers, right? I shouldn’t even say offers. We started getting inbound interest from people who wanted to talk about it, so over the course of the business we got five inbound conversations that were around acquiring Drip.
ANDY: And you said that those started coming in about 18 months in or so?
ROB: Yeah, I think that’s when. It was… It was right as we kind of hit the mainstream, you know? ‘Mainstream startup’, you know, an internet marketer. Not truly ‘mainstream’, but we truly ticked up. I forget… it may have been $50k-$60k MRR when we hit a lot people’s radar, and that was when we started getting them a little more frequently.
ANDY: And I’m guessing at that point you’re also getting inbound interest from venture capital groups, and that sort of thing. Is that true?
ROB: We were, yeah. That was even more frequent, to be honest. We had maybe five inbound, like I said, regarding an acquisition in the course of about 18 months-ish, and I would guess we had 15 inbound from VCs? I mean, it’s just more common. But, you know, oftentimes it’s kind of a low-level assistant, basically, who’s prospecting, almost, for bootstrap startups that are having some success.
ANDY: Yeah, that was the impression I got as well, where it’s almost like the SDR system that lot of bigger SaaS companies are using as a sales… They have someone kind of just who’s maybe slightly above an intern, but they're pretty junior. They're just sending things out to see if they can get any bites, and maybe they can get the diamond in the rough that they can bring to a partner and get a nice pat on the back, but it’s not as serious as a lot of people might first think.
ROB: I totally agree. And they’re monitoring things like crunchbase and Datanyze now, because I noticed when we hit… So Datanyze has market share things, and when we hit number 11 on the marketing automation in terms of worldwide market share, we got a lot more.
ANDY: I see.
ROB: Who was it? It wasn’t TechCrunch but it was one of those sites, like VentureBeat, who put out a report about the best marketing automation, and we were the best one for small business, and you know, each of those things just puts you on everybody’s radar, and then you see this big influx of interest.
ANDY: For sure. And so, at what point did you say… When you started getting this interest, you were at least considering it, but at what point did you say, like, ‘Alright, this is something I’m going to do. I’m going to sell the company’?
ROB: Honestly? That was not until two weeks before it closed. I was willing to back out right up until then. You have to be, though. YOu have to be willing to back out because, if not, then you’re not negotiating well, you know?
ROB: Here's the the thing… the mistake a lot of founders make is you get this initial offer and you’re like, ‘Oh my gosh, I’ve never seen that many zeroes behind a dollar sign!’ you know? And it’s on paper, and you negotiate up-front, and up-front you’re like, ‘Oh yeah, I’m totally going to push back,’ and then you get two weeks in, and then you get two months in, and then you get five months in and you’re just, you’re kind of beaten down and you really decide you want that money. You decide, ‘Boy, it would be really nice if I could check out of this business and just take the money,’ and I never… I never got to that point, and even up until two weeks before, we were still negotiating things and I said, ‘No, this will kill the deal,’ you know?
ROB: And so that was my way of coping with it. I also don’t particularly enjoy… How do I say this? I like harmony. That’s actually one of my strengths from StrengthsFinder, is like, having everybody be in harmony so that negotiation where you’re just telling everybody ‘no’ all the time is actually pretty stressful for me.
ROB: So we had a total of one year of talks with Leadpages, who acquired us, but it was really about five months, I’d say, of pretty intense, you know, 20-hour-a-week negotiations.
ANDY: But, so, to push back a little bit, while you might not have said, like, ‘Alright, I am going into this negotiation and I am going to make a deal one way or another – I need to sell,’ you still have committed a bit, because as you said, this is taking a major toll on you. You called it one of the most stressful periods of your life. It’s taking 20, 30 hours a week to negotiate these points. So even though you’re willing to walk away, you’ve still invested a good amount of time, and so was it specific to Leadpages and their offer that made you say, ‘Alright, I’m not necessarily going to take any deal but I’m going to pursue this,’ or was it a more general, ‘I’m going to pursue a few of these options and see how it works out’?
ROB: Um… It was… I mean I… So I was open. By the time I got the very first offer – or the very first conversation, I should say, because that didn’t result in an actual paper offer – that wound up being very… It wound up triggering in my head the thought of ‘under what circumstances does this make sense’, right? Like, I’m open to an acquisition, but I have not decided to sell the company. There’s a very different line there. Deciding to sell the company is like, ‘Alright, now I’m going to start…’ I mean, you can start doing outbound, you can hire an investment banker… You really want to move this company.
ANDY: I see.
ROB: I wasn't there. I mean, that’s how I’m defining it. I was more like, ‘Hey, if the deal makes sense for everyone…’ and so I had deal-breakers, right? I didn’t want any of my employees to lose their jobs. I didn't want any customers to get screwed, meaning I didn't want the product to get shut down, and then I wanted it to be a good strategic fit that we’d all enjoy working for, and I needed… There was a price, obviously. I needed enough money that I never had to work again, to be honest. That was it. I was not going to sell less than that.
So those were kind of the four things, and different… We did get approached for more financial backers and they talked about doing things that would not have been beneficial to our employees or our customers-
ROB: -and that was pretty much a deal-breaker up front, and Leadpages was always on-board with the vision. I mean, I didn’t even have to communicate those to Clay, who’s the CEO of Leadpages, he communicated most of them to me before I even, you know, was able to tell him those were my issues.
ANDY: And so I know you went into a lot of detail on this on your podcast Startups For the Rest of Us, so if listeners want to hear a really deep-dive into the psychology of this, how it all played out, definitely check out that episode, but I do have one other question I want to ask about the actual lead-up to the acquisition. Now that you’ve been through this process, now that it’s happened – it's about seven months in the past since the deal closed – what would you have done differently from the start of it to make things go a little easier?
ROB: I don’t know. I’ve thought about this a lot, and I did… I read a tonne about acquisitions like this. I listened to a tonne of podcasts, called friends who've been acquired.I spoke with six founder friends who'd gone through acquisitions, I educated myself a lot on it. I hired a broker early on. I feel like I did a lot of things right.
ROB: It stressed the hell out of me, but that’s my deal, like, that’s my personality. I don’t know… I don’t know what I could have done differently, to be honest. I’ve definitely post-portemed this, and I don’t think there's a single thing that I would have done, right? I think there are a lot of things that if I hadn’t done, would have been really hard. LIke, if I had told the team too early, if I had let myself assume… Like, I kept running the business as if we were going to be aquired [0:08:55] I’m sorry, if we were NOT going to be acquired! Like, we were hiring people, I was spending money on ads, which, if you’re like, ‘Well, we’re three months away from being acquired,’ like, you’re not going to spend all that cash. It was cash that I spent, you know?
ROB: So it was a really interesting thing. So, I feel like I did… I feel like I did pretty well. I obviously didn’t do it perfect, but I don’t know that I have the insight to really say, ‘Man, I really fumbled the ball there.’ Maybe the one thing was that I… I think it took a toll on my family, my stress, and that’s one thing I wish I’d done differently, was channelled that, or been less stressed about it.
ANDY: And that’s one thing that… I mean, obviously with your background in educating bootstrap starers, bootstrap founders to navigate similar situations, but you're also connected to a lot of people who’ve been through these things, so you do have a strong network you can lean on. YOu’re a very curious, inquisitive person, so you’re going to do a tonne of research on your own, and you're going to prepare for it. A lot of times, I hear similar answers where people will say, like, ‘Oh, I wish I could have just relaxed a little bit throughout the process, not been a stressed out,’ but I feel like it’s easy to say that in hindsight but it’s very difficult to actually do that? Like, this is a major, life-changing decision. Even if you have a handful of successes under your belt, even if your business could survive without it, like, this is life-changing money. This is literally going to change the circumstances of other people’s lives as well, and so just saying, like, ‘Oh, I wish I could have been a little less stressed,’ is hard to actually implement, so I’m glad you actually went into what did go well as well, because that made a big difference, I think.
ROB: Yeah. Yeah, it certainly did. I was meditating. I was doing deep breathing. I was doing all that stuff, and I found that it didn't’ help me as much as I would have liked in the times of peak stress, so…
ANDY: Mm hmm. And, I mean the other thing, too, is that your wife is a therapist. She’s a licensed psychologist, right?
ANDY: And so, do you think that helped at least manage it a little bit? Or at least helped her understand you, what you were going through, and to kind of soften the blow on the family a little bit?
ROB: I think it did help. I think she’s just a smart person in general, even if she wasn’t a psychologist. She kept telling me things like, ‘YOu’re overthinking this,’ or, ‘Don’t be so stressed about this.’ Because I would say things like, ‘Look, I could say the wrong sentence on a call and lose a million dollars,’ and she was like, ‘Is that true?’ and I was like, ‘Ehhh, I actually think it is,’ and she was like, ‘I don’t think that’s true.’ So, she would try to be a sanity check for me, and she knows people really well as a psychologist, so I think, overall, it was a benefit to have her aboard and giving me advice during that time.
ANDY: And so what I want to get into now is how things went after the deal closed. Leading up to this, were you concerned at all about becoming, effectively, and employee? Because a lot of people don’t understand that when their startup sells it’s very, very rare for the founder to just completely walk away from the business, and go off to their island, and just relax. There’s usually going to be some period of transition where the founder of the company that is being acquired is working at the acquiring company. So, did that weigh on you at all?
ROB: Not really. I… you know, because if you think about it, I’m not really entering as an employee. Every employee… Every job I’ve had as an employee, I was kind of a developer. I was a tech lead, and I was interviewed, and then I was brought in, and it’s just completely different. Like, Clay was basically, like, ‘Look, you’re going to be VP for your product, for Drip. Your responsibilities are going to be what you do today except you're have a bunch more money to hire, you’re going to have a bunch more resources to get more, you know, equipment, you’re going to have a full-time recruiter to help you hire, we’re going to give you five support people where you have one today…’ I mean, just, on and on and on. I was like, ‘Wow, that actually sounds like my job today except way easier,’ right? And he was like, ‘Yeah, we’ll take on HR, and legal, and support, and marketing,’ and all this stuff. Some of those were hard for me to give up, like, support and marketing early on. I was like, ‘You know, this is my thing. I've done it. It’s my voice!’ But I think employee… I hate to say this. It sound a little… It’s like ‘employee’ is a little bit of a misnomer for what I’m actually doing.
ROB: I still feel like a founder; I just happen to be within this much larger, well-resourced company. Now, that’s not the case in every instance though, right? I happen to have a unique… I mean, this is one of the reasons why the Leadpages deal worked, is because Clay Collins from day one was like, ‘You’re a founder. I respect that. I know what you’re going to need. I know you need leeway. I know you need creativity, and I know that you can drive this thing, but I’m not going to be all up in your grille, right?’ I’m not filling out TPS reports. I don’t report to the board. They come and ask me questions. They say, ‘Hey, we have a board meeting – tell me where Drip is and what’s going on here. What are the new features?’ Boom, boom, boom. That’s it, 20 minutes later.
ROB: So, I don’t make slide decks, you know? And it’s not… He knows that that would just detract from Drip as a product, so they’ve handled it well. I think if you got acquired by Dell, you know, or HP, you may be in for… You really are an employee and it could be catastrophic. But we still… I mean, I still work for a startup.
ROB: It’s a 170-person SaaS business with a bunch of venture capital, so they're moving fast and it feels very much… very similar. I would say I had zero trepidation going in because you don't know… Clay was telling me things and I’m thinking ‘I believe him’, but you don’t know until you hit the ground, right? Is everything he’s saying going to come to fruition, you know?
ANDY: Yeah, and so maybe a better way of phrasing it, because you are right – when you look at that you’re not just a typical employee clocking in, clocking out, and grinding through it – but at the same time… You mentioned earlier that if you did a deal, you wanted it to be so you would never have to work again, but with this deal you literally do have to keep working.
ANDY: And so does the fact that even though it's an enjoyable environment, and you’re given the leeway to continue acting like a founder, you're given more resources to actually make it easier to do what you were doing before, did knowing that you had to be there for a certain amount of time weigh on you?
ROB: I… it's definitely something that we talked a lot about. It's something that I thought about. I think ‘weigh’… I never felt a weight on me.
ANDY: Or burdened?
ROB: I didn't feel burdened by it. I guess… So, you know, here’s the thing. If you sell to Google or Yahoo – well, Yahoo’s not buying anybody any more, but big Silicon Valley companies – you stay for three years. There’s no negotiating that. if you sell to smaller companies, it’s often 18 months to two years. Sometimes it can be three too. Maybe they’ll start the negotiations there and you’ll negotiate down. So this is the, you know, let’s just say wide range is probably one to three years you’re probably going to have to do this.
ROB: And that is something that, like you said, almost no-one gets around that. I know of two founders in all the acquisition stories I have ever heard, I know of two who walked away the day the deal closed.
ANDY: Who were they?
ROB: One was Derek Sivers-
ROB: -who sold CD Baby, and he actually sold it for less than he could have gotten. He sold it for $22 million. He could have gotten more money if he stayed on, but to him it wasn’t worth it, because he had enough and that was his deal from the beginning, was he was going to walk away. Dan Martell’s the other one, but he’s done three or four sales and one of them was sold to a kind of a founder friend of his. You know, it’s very extenuating circumstances.
ANDY: I see.
ROB: He walked away the day it sold. I think that was Clarity, that was when Clarity sold. So, to me, it was an expectation that I would have to do it.
ROB: And so it wasn’t, you know… I was burdened by the transition. Obviously I don’t like transition, right? I like things to go… So I was weighted down by, ‘Oh my gosh, this is going to be a hard transition,’ but I wasn’t weighted down by, ‘Oh, I have to go into an office three days a week,’ (because I have two work-from-home days, you know?)
ROB: We got to Minneapolis, which I think is a great city, and so there was a bunch of plusses that came with it as well as the money into the bank account, so I was like, I was paying more attention to that stuff, to be perfectly honest.
ANDY: And so then let's talk about that transition, because that’s something that not a lot of people talk about or focus on, is that when you’re buying, or a software company is sold, what actually happens? Like, technically, what needs to happen during a transition? How does a team get integrated? What does this actually look like on the first day when you guys have moved the team? Some of the team went, right?
ROB: That’s right. Everybody was given a choice-
ROB: -of whether or not to move, because we had five people in California and then five, kind of, distributed around the country.
ANDY: So once the people who’d decided to move are there, once you’re there, what actually happens to make these two companies integrated?
ROB: Yeah, so on day one, none of us were out here, right? Like, the day it closed, our checks-
ROB: -basically our checks just started to be signed by someone else, and we signed up for their healthcare and their 401k and this other stuff, and we were also remote, because it was like, ‘Okay, now the deal’s closed – let’s figure out how to move out there.’ I was the first one that moved out and I was going into the office, and it was weird, you know? You go into a new place and you don’t know anybody, but everybody kind of knows you because they know about the deal, right?
ROB: As well as people heard about me and then listened to the podcast, so suddenly I have an interesting, you know, entry into a new place. Technology-wise, we… I’m trying to think. We decided to do tighter integrations with their products, Leadpages and Center, but we’re in Ruby and we’re hosted on Amazon Web Services, and they’re in Python and they’re on Google App Engine, so there’s no, like… We didn’t shift hosting or anything like that.
ROB: There was none of that, because it's not even compatible. We have two different code bases, and that was from the start. They knew that. But we did tighter integrations with both of their apps. The intent for Leadpages… See, it’s going to depend on who’s acquiring you, and for what purpose. I mean, literally, some companies acquire you, they disassemble your product, they chuck it, they take your people and they have you rebuild it within their ecosystem or whatever, and that’s not what happened here. They really wanted to leverage our team’s experience in marketing automation because, as Clay kept saying, it would take Leadpages maybe two years to learn everything that we had learned, so they wanted our knowledge. they wanted the people to keep running it because it was being run well, and they wanted the technology because we were scaling a SaaS app, and there were, you know, tens of thousands of lines of code, three years of people working on it. And so that all takes a lot of time. So technology? There wasn’t really an integration beyond just tying the apps together.
ROB: People-wise, at that point, I still managed the whole team, right? Everybody just reported to me and I then I started reporting to Clay Collins instead of nobody, and that was really it. So the stuff that changed the most was me, right? My situation, because suddenly I was reporting to someone. Now, luckily Clay Collins and I see pretty much eye-to-eye. He actually doesn’t like it when I say I report to him. He says, ‘No, no, no, we’re partnering on this,’ you know what I’m saying? And that’s been a good thing, is he doesn’t… He had a do-no-harm clause from the start, and he said, ‘Look, we’re not going to impose a bunch of process on you guys.’
ROB: That's when acquisitions break, right? It’s suddenly, alright, you’re moving fast, you’re this 10-person team, you’re shipping… Here, you have to do one-on-one weekly meetings with all of your people, which we didn’t do, and I think Leadpages does do, but we still don't do that because that’s just not how we’ve ever run the team, and it’s small and you don't need that. Or here, there’s this weekly one-hour product demo that they do at Leadpages, where they do an internal demo of everything they do do. ‘You don’t have to do that right now,’ this is the stuff eh didn’t want to just bring us to a screeching halt in month one, that I think was pretty astute of him to see.
ANDY: And so you’d mentioned how a good portion of value in the acquisition was based on the knowledge that you and your team had acquired over years of being in the space, living the space. How do you do a transfer of that knowledge? Like, obviously it’s not as black and white as that, but how do you work to start integrating some of that knowledge into the rest of the business?
ROB: Yup, that's a really good question. What we did is… You think about it, we had one support person, and suddenly they quintupled the number of trials we had, so 5x the number of trials we had in about 20 days or something. It was insane, so we needed more support people right from the start. So I connected my support person – who was remote – I connected him with someone internal to Leadpages and just said, ‘Look, pick his brain. Create a wiki based on everything that’s in his head,’ and that's what they started doing. And he started answering some tickets, and my support guy, Andy, would back him up, you know, and be, like, ‘well, if you need to escalate it, escalate to Andy,’ and so we did that for about two weeks. And then it just slowly… Like, it’s this organic process, and by the time they were done with the month, the Leadpages support guy started training then people internally at Leadpages, and now there’s six or seven full-time support people in seven months, right?
ROB: He just has multiplied his knowledge based on it. He was already doing support for Leadpages, so he’s a smart dude and knew their systems, but he just had to learn the product. Then there’s kind of, customer success, and there's sales, you know? We repeated that process with each person. It was almost like pair-programming, if you think about it? You know? It’s kind of like doing stuff in tandem and escalating, and just transferring the knowledge over the course of about a month. Then there’s still some knowledge, you know… HR and legal have all been given away, and support, customer success, sales… I think really the only knowledge that’s still in my core team is really product and engineering, you know? It’s a product roadmap. It’s what gets built, how it gets built, and who builds it. That’s really the last thing that I think isn’t disseminated, you know, throughout the rest of the company.
ROB: It’s pretty localized. And I share it. I mean, we talk to people and they say, ‘What’s coming next?’ so they do know what’s coming, but that’s not necessarily been an integration. You know, our engineering department, as an example, haven’t integrated. We don't go to the same meetings they do.
ANDY: Will it stay that way?
ROB: I don’t know. I mean, that’s been…
ROB: Certainly, The original intent was to not break things and it's working, so I think we will. I want to become more integrated – I actually like the engineers that we work with at Leadpages – but I think we need to be careful because there are much bigger teams and we are, and we can't… I don't want to apply the same things they do to this… what's currently a 7% engineering organisation, whereas they’re 40%, you know?
ROB: So my product team is about 10 or 12, but there's really only seven engineers doing things and so… yeah. I don’t know. I mean, it's hard to say what will stay this way for one year, two years, three years… You know, you don’t know what will happen way far down the line, but so far it seems to be working.
ANDY: And so now, seven months into this transition, at this point is there anything you could at least saee in hindsight that would have made THIS phase of it easier for you, going into it?
ROB: For me? Yeah, it would all have been mental. You know, early on, I mean we were two weeks ahead of closing and Clay said, ‘Alright, we want to re-do the marketing site,’ and I was like… I was not… That was not good for me. I was like, ‘Are you kidding me? A) I don’t have the… I’m like worried, still, about negotiating these points, and this is insane, and I’m not committed to this thing yet, and we still may not do it,’ you know, it was just all this stuff, and then I was thinking every line of copy ever written on this site was from me. LIke, this is my voice.
ROB: You know, Drip is my product and this voice… I do not want you to put- because Leadpages and Drip market it differently, right? There’s a different way of marketing.
ANDY: For sure.
ROB: I was like, ‘I don’t want that voice. I don’t necessarily want, you know… It’s always been my face in the videos, my voice in the videos,’ but we talked through it and I realize in hindsight that was a bootstrap, small-business thinking. Like, they have two professional videographers on staff. They’ve people who look really good on video. They ran a bunch of copy by me, and it’s actually really good. Like, I learned over time to trust them, but I’m not a very trusting person up front, right? I’m very skeptical that it’s going to be done ‘well’ or done ‘right’, so I think for me, that is one example, and I probably did that, like, seven times, right? When they were like, ‘Okay, now we want your support guy, Andy, who’s reported to you on different…’ Andy’s worked for me for six years on multiple products – HitTail, Micropreneur Academy, he did support for [Inaudible 0:25:22] for a while, did support for Drip…
ROB: I mean, the dude is remote. I've never met him in person, but we just… We are a good team, and he worked really well with our team. They want him to work with someone inside Leadpages, you know, just a couple of months ago, and I kind of went through the same thing again of, like, ‘Oh, this’ll never work. Oh my gosh.’ But you know what? I talked to Andy about it. He was like, ‘This sounds great.’ He already was working with the people, he said he has no problem switching, and to be honest I wasn’t supporting him in the way I should have been because I’m too focused on the product.
ROB: I can’t help him be a great support person, like, it was 20 minutes of my week to help him, whereas he has a whole team now dedicated, so it makes more sense. So my mental shift, I should have trusted more that they would do right by us, or just do the right thing, because they're smart people and they wanted it to work, and it has. I’ve not regretted a single one of those transitions out of my control to the Leadpages team.
ANDY: And I think that’s similar to other advice, where it’s something where you want to be careful with that, because obviously you do need to be aware that there are going to be changes, that are probably going to push your boundaries, that are going to challenge you a bit, but you don't want to go in just trusting everything because you did build this. You do have a lot of experience with this. And so it’s trying to find that balance, and really build that relationship of trust, and it sound slike, seven months in, you guys have built on that relationship and that there is a lot more trust, and that while I’m sure there are still going to be some things that you kind of hold on to, you’re at least seeing now that, ‘Hey, they have the best interests of the company in mind, and I at least need to keep that in mind when I think about what they’re suggesting.’
ROB: Yeah, that’s exactly right, and there are still a few transitions that are happening here over the next month or two, and those, I’m much more open-minded to. You know, again, because they’v done the right thing, and they’ve all turned out so well both for the people… I realized that I became really protective of my people. I didn’t want anything to happen negative to them, you know? And not even… They weren’t going to let them go, but it’s like, ‘I don’t know, I manage them the best!’ You know? That’s actually not the case, man. You’re like, ‘Back off,’ and so I think there’s certain folks who, you know, they just have outgrown what I can do for them and I actually think they’re better off working with others in the company.
ANDY: And at this point in the whole process, if there are founders out there who have a business, see it's may be doing $10k or $20k MRR right now, it's growing, and they don't necessarily have an exit in mind but they know that that's a path that could come up, do you have any advice for them on how they could just prepare themselves better for that potential?
ROB: Sure. The first thing I would say is, yeah, like you said, don't build a business with an exit in mind. I think that's a bad plan because you make short-term decisions. So, build it, think that you're going to work on it for five or 10 years, and just grow that MRR. The second thing that I would do is try to remove yourself as much as possible. I mean, this is kind of generic advice, but one way to be able to negotiate down that time you have to work for an employer is the further you are removed from the business. So if you're still making day-to-day decisions on certain things then you might be needed for this long, but if you're still writing and you’re like, the core developer, like, you're really critical and there's a big, big, factor there. The third thing is have it as its own entity, right? So its own corp.
ANDY: Oh, okay.
ROB: I had an umbrella corporation that owned, like, six products and Drip was one of them, and that was a mess. I actually, luckily… not even luckily – I kind of saw the writing on the wall that it was coming down. I had that we formed another corp. We split out the credit cards, split out the bank accounts, split out the Stripe accounts, you know, everything you have to do, and that took four or five months to get all of that split out.
ROB: Yeah, it's crazy once you have stuff that’s all entangled, so don’t do that, I guess, is my advice! I mean, I wound up splitting it out well in advance of the acquisitions because the inbound talks had started, and I was like, ‘You know, if this ever does goes through, I don’t want to be doing that during the negotiations.’
ANDY: I think it was Brennan Dunn who was talking about when he was selling out Planscope, was that he hadn’t separated that from the rest of the business, so he had to go through and reconcile all of these expenses, and Patrick McKenzie – it might have been Patrick McKenzie, it was one of them who had talked a lot about having just that kind of conglomeration of different entities, and just how it made things a bigger pain in the ass than they actually should have been.
ANDY: So before we wrap up, I like to ask everyone some rapid-fire questions. Again, I’m going to go through them quickly. Don’t think about them too much. I’m not trying to trip you up or anything like that. And so the first one is just currently, what are you spending too much time doing?
ROB: Probably looking at… Surfing on eBay. I buy collectibles. I have some newfound money and I’m looking at ways to invest it! I actually like collectibles, comic books in particular. Very expensive, investment-grade comics. I’m probably spending too much of my spare time, like, tooling around doing that.
ANDY: What are you not spending enough time doing?
ANDY: And then for the business side of things, what are you hoping to accomplish in the next quarter?
ROB: We have a couple of features that I want to ship.
ANDY: Are you able to say anything at all about what those features are?
ROB: Yeah, I mean one of them is a bit convoluted until you see it but it’ll help make integrations a lot easier, and then another one is making workflows much more… Workflows is the big visual builder in Drip where you build marketing funnels, and to help make those more easy to share with other people.
ANDY: And then, do you see, if something got in the way, like, are there any potential roadblocks that could stop you from getting there?
ROB: Oh, sure. I mean, scaling Has been the one that you know been keeping us from building features faster. We had… let me do quick math here… maybe 6 times more users today than we did the day of the acquisition. Six times. It’s insane.
ROB: And we were big. We were a seven-figure business already, right?
ROB: So it’s that alone. Just keeping the service running performant is the single biggest thing that we are… We’re hiring. We have multiple people now. Multiple developers. All they’re doing is scaling the system. Zero feature-build. That's the been the thing that, you know, when we have scaling issues or performance issues we have to pull feature-building developers off, and that’s what would be the big one.
ANDY: That's really interesting, and then building from that, what do you see as the long-term vision for Drip?
ROB: Oh, I mean, it’s to be the best marketing automation platform out there, and yet the most approachable, right? We’ve offered a free plan, we’re way much lower priced than our competitors on the upside, and we want to be the best and the easiest to get into.
ANDY: Awesome. Rob, you shared a tonne with us today. I just want to say thanks so much for your time, and before I do say goodbye, though, where can listeners go if they want to hear more from you, learn more about Drip, and all of that?
ROB: I would say I’m on Twitter, but I’ve kind of just left it behind. I don’t really Tweet or respond any more, so I would probably say startupsfortherestofus.com, which is my podcast, where I talk about all of this stuff for about 20 minutes every week. We have 320-something episodes now, so we’ve been doing it for five or six years.
ANDY: Awesome – I’ll make sure to get all of that linked up in the show notes, and I’ll also link up some of those other interviews where you spoke more in detail about building up Drip, about what went into it, and about some of the other thought processes in the acquisition, if people want to check that out. But, Rob, thanks so much again. It was as lot of fun chatting today.
ROB: Sounds great! It was my pleasure.