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[Music]
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thank you
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this is WP product talk the place where every week we interview an experienced WordPress product owner on strategies
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tips experiences failures and successes of running a successful and thriving
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WordPress product businesses and I'm Katie Keith co-founder and CEO at
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barntube plugins and I'm Matt Cromwell co-founder of give WP and senior director of customer
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experience at Stellar WP and today's topic is elevate your game
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secure investors and grow your WordPress products I'm personally really excited to talk
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about this one because it's honestly um kind of like a newer phenomenon I would say in the WordPress product
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ecosystem uh WP products um were really not all that entrapment attractive
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investment options in the past um and uh with the huge success of things like woocommerce of course uh
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they don't have investment but they're a huge success um and Elementor and others like that
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things have changed dramatically so now we even have investment funds like Amelia capital and wpbeginner
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accelerator that are dedicated specifically to funding WordPress products so it's exciting times it's a
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cool subject yeah and to talk to us today about this subject is Vito peleg
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welcome veto to the show how are you
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good good thanks for being here man my pleasure I have uh you just your whole
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environment there just is really fun because uh I'm still remembering you
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live at cloudfest I I need to I need to post that video yeah we've all seen the video yeah
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Set uh in concert at cloudfest and I had a couple really really killer solos man
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great job thank you thank you that's the you know that kind of brought me back to the stage after seven years of uh doing
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uh a business or wordpressing without being in a band so that was really nice
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uh to have some friends from uh you know from from the current life you know
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seeing some of the things from the previous life you know yeah if only music paid as well as WordPress right
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tell me about it we wouldn't be here you know none of us
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would have that's right yeah I'd be doing something else too
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um hey folks if you are here watching on YouTube um that chat is open and we'd love to
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respond to your questions or comments or feedback or anything so uh uh but let's kick us off
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um we always want to start first by talking about what's uh so what's such a
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big deal about this subject why is this so important um so veto uh we want to give you the
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honor um maybe if you don't actually first give us just give everybody we know who you are but give everybody a
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little bit of a background of who you are what you do and why did we bring you on to talk about this right
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um so uh I run a company called adorem.io I'm the co-founder and CEO and
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we started or I I think I started my or when I see my journey starting as um as
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a musician back in the day and I started building websites from the back of a van and just to make some you know some
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money from the side that route to a small freelancing business and then eventually once uh I turned 30 and it
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wasn't really nice to live in a smelly van with a bunch of other guys anymore then we settled here in London and I
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built an agency and through that experience I I tried to fix my own
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problem of collaborating with clients and getting on the same page with them and that was the basics of what became
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WP feedback which is a plug-in that later evolved into adirin which is the SAS platform with a focused WordPress
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plugin um that helps teams collaborate internally as well as externally with
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clients and stakeholders and things like that then we also uh did a raise uh
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recently about a little less than a year ago a few of our friends in the WordPress space and even your co-founder
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their Matt joined us on this uh on this last or the first round
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um which was really exciting to see people that you know from events and you know from just hanging out in the space
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um being in that position where they can help Founders take things to the next level in that way so as you mentioned in
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the intro this is a really emerging subject and I've been looking into this
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um really from the inspiration that you mentioned regarding Elemental and tools like that and how they did it and I even
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spoke to some folks there to try and understand how we can do that so I'm happy to share and I'm excited to share
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some of the stuff that I learned because it wasn't an easy process but yeah for
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us it was the right thing to do absolutely nice yeah I mean I I do feel
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like thinking back a bit you're one of the earliest ones that I noticed it was taking funding uh in a in a serious way
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as as an approach to scale your business um and uh I and and doing it
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successfully uh from all outward appearances um and then there's also of course been
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others um and uh we actually Amber Heinz is uh on uh one of our co-hosts and she has uh
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uh secured some investment from Amelia capital in particular so
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um it's it's definitely coming uh and it's a it's an interesting one so
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um Vito what's your take though why is this so important for WordPress product owners in general why is this something
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that they all should be thinking about or getting uh informed about so I think that um it might not be really important
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it really is dependent on your goals and what you're trying to take where you're trying to take your business uh because
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um raising money has a lot of uh implications that come along with it
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mostly for from being then um being the right
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Shepherd of this of these funds and to make sure that you know how to leverage
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this in the right direction to give yourselves as well as your
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investors a good Roi or a good return on their investment in that way so thinking
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in this direction um what it did for me initially it first of all it opened my mind to what does
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that even mean and if even if you're not looking to raise money and but you are looking to sell the product eventually
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preparing it for a raise is a very similar process only that if you're doing it right now rather than later on
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that that that gets you thinking in the right direction for for being ready for
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a later acquisition as well yeah nice absolutely gosh that's really
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good Insight I mean this is a subject that I do try to inform myself on uh a
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bit and it is something that uh uh definitely have looked into we'll talk about that a little bit later but uh
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it's really really helpful for us to have somebody like you on who really has hands-on experience with it so yeah and
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you've done the same thing with uh with selling give so there's probably
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insights in that way that really connect to the fundraising side of things yeah
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absolutely for sure um overall for me I think this one is so
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important for folks because in in a lot of ways there's
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um there's a lot of ways to go from zero to uh
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what's the best way to say it zero to zero to sustainable zero two I'm not
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afraid I'm not going to be able to pay the bills tomorrow like that that little spot right there is a really hard place
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to be in when you're building a product um getting past the like I have to worry
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about paying my bills part is is always like ah once you're past that and you're
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like oh I think I might actually even be able to like hire employees and things like that all of a sudden you start to
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have some confidence in what you're doing and and uh it just changes the way that you think about everything you do
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so I do think that like investment uh is a good option uh is one good option to
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help bridge that and ideally push way past it because ideally you want investment to be able to do a lot more
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than just pay the bills um but um it's a good way to get finally into a spot in which you don't have to
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be so worried and concerned about whether or not you're going to go bankrupt tomorrow or not yeah
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um that's one one big reason why um the other one is just just simply that it's an opportunity that is
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available that like I said before that wasn't really before um and any opportunity that business
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owners have to expand their business and grow their business they should take seriously
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um so the whole concept of of investment I think for a lot of folks who maybe are not into that world or have always
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really just bootstrapped or been solopreneurs and things like that sometimes they them they might even be
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like ah why would I take other people's money they might have a negative connotation even to it
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um but I'd really encourage folks to get over that and just at least get a lot more informed and understand how it
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might free you up in ways that you didn't think was possible today um so that's that's kind of I don't know
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where I come from from a little bit so I don't know does that make sense for veto or am I
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um it does even though I you you mentioned that this is a nice way of getting um of making sure that you don't get to
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go bankrupt I think it actually increases your chances of going bankrupt yeah there is that threat too yes you
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know because you're you're intentionally increasing your spend as opposed to when you're on when you're a bootstrapper and
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when you're bootstrapping you're very conscious of these things and making sure that you are always within profitability
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um and you just grow slower but you take those steps but then when you when you
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raise money you have a large sum to spend exactly on growth and so what
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happens if it doesn't work you know yeah absolutely and that that's the risk that you have to take into it but like if you
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believe that this is the way that that you're gonna go and you have a plan that's kind of that you feel confident
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is going to work it can alleviate a lot of stress that's that's yeah that's
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helpful context I appreciate that um Katie what's your take
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yeah so at Barn two we've always been completely bootstrapped and um I'm
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interested in learning more really about what would be the benefits at different stage of the company life cycle I see
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Nathan's added an interesting question as well uh what stage about raising because it does have permanent
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consequences that have always kind of put me off personally about the um reduction of control and of having
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investors because they are not entirely Your Own Boss in the same way so I'm interested in learning about the pros
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and cons and helping other people do the same nice I didn't even notice this this is a
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great one let's bring it up already uh since it is directly directed at Vito Vito do you mind talking a little bit
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about this of course so we were bootstrapped for about three years before we did the race and so we already
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had um uh thousands of customers uh that were using uh the platform and tens of
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thousands of installs of uh you know on the websites um before we actually got into that step
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the reason why I went to it is because we I felt that we reached the stage where we had a workable product so this
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is to answers Nathan's Point here did you have a workable prototype it was more than a prototype we I felt it at
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that stage we had product Market fit and um and I can take what I learned over the past three years and scale this up
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big you know and really what I and and I think it's a it's a good place to frame
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that my goals are are are are are rather big know in terms of where I want to
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take the company and Volvo was mentioning here about 1 billion exits and things like that so I'm
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actually really am looking into these directions and how can I get to that you know how can I get to a one billion exit
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eventually from uh from the company um it's not far-fetched many people have
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done this before it's just a matter of focusing and thinking in this direction and so when I did the calculation of how
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long it's going to take me from a place where I have a workable product I have product Market fit I have customers that
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are enjoying it that it's useful to them uh how how do I get into that stage so
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it what I really figured is that if I'm Gonna Keep at that current rate it's going to take 67 years
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to get to my goal and uh you know in the olden days that's how people did it they
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actually built generational companies to get to those stages uh but now we use
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money as an accelerator and so that's one was one of the uh one of the drivers
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there already nice yeah we have uh quite a few good uh comments and questions here vova uh who
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has been on the show before is asking good as saying some good comments and asking some good questions too I'm gonna
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bring them up as much as I can because uh it's super helpful I think uh this is Boba State boba's founder of freemius by
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the way folks if you don't know traditional VC investors are often are after unicorns because they need that
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one billion dollar exit to compensate for the rest of the failures true um that's I I I can sympathize with that
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absolutely and for those who might not understand like unicorns are essentially the folks who kind of are the Jack of
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all trades that kind of do all the things they're product Builders they're marketers they're developers they uh
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they have a good business Acumen um all kind of all the above um is the
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kind of folks that they're looking for well the actual um in in fundraising talk unicorn is
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really around the 1 billion Mark um company their evaluation has reached
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1B million that's that's when you become a unicorn you know got it got it good clarification too
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thank you um but uh one more question from vova
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what outcome are WP investors actually aiming for what's your take on that one veto so it's it's very right because uh
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going through this process I went through a lot of discussions with traditional VCS and
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um and I even tried to go or explore this uh this channel uh early on in the
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days of the product um the world changed my mind because kovid hit at the same time as I was
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starting to do Outreach and they said all right let's just focus on what we have here for now and then revisit this
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idea later um but when I had these discussions uh early on when we were
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um a plug-in this is what is all that it was there was no dashboard there's no SAS built around it that was a lot more
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challenging uh um traditional VCS they don't see WordPress as a significant
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space to invest in and one of the metrics or the reasons why I think that
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this is uh happening is because they look at the biggest exits that happened in our ecosystem and let's say and you
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mentioned woocommerce as one of the biggest exam or woocommerce is a huge success story in the WordPress space
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um but if you look at how much they sold the company for compared to the valuation of Shopify even though they
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are like three times on the market share um and then then it's peanuts you know
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yeah absolutely and so it was a long time ago wasn't it when WordPress wasn't valued in the same way yes yeah and even
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then though I feel like a lot of folks felt like they sold for less than they should have sold for probably very much
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yes exactly and I think that this even goes it carries out to even recent exits
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that happen in the space um you know I think that that um some of
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us here on the panel know some of the numbers even behind the scenes of some of the companies that have sold so it
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it's not in the numbers that you see Google buying a company you know or the numbers that you hear in New York Times
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about an acquisition or this this person is now they went public and you know those kind of stories uh it's not in
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these it's not even close to this reality and so when when you need to
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manage as a fund there's a VC you need to manage other people's money and you try to figure out where should I put that or would I put that in a SAS
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um a business that already was proven uh this category was proven to generate
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these exits in that level or should I put it in a plug-in that these exits have generated a lot less in that way
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you know yeah the multiples are very different aren't they in WordPress versus
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um Tech more generally which is a shame and I think it's improving but very slowly but of course atherim is a SAS
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isn't it so it's a bit different yes well you became a SASS and which like I
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think this is what's so interesting too is like part of our conversations that we've been having we've had a couple
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different conversations on the show about uh WordPress plugins versus SAS yeah should you sassify and things like
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that it sounds like you decided to change your plugin to a SAS specifically
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for the investment angle is that right no so there wasn't it wasn't connected to that specifically it was mostly
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because users um so the plugin what it does it adds stickers to a website like Post-it notes
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on an actual website kind of thing and then as we started people were saying okay but I have 50 website 200 500
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websites what do you expect me to go into each website and see who left comments where and all of those kind of
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things so we realized we needed a centralized experience to bring in all
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of these communications uh it was purely user-led at the early stage of it but it
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did turn out to be a good choice because of these uh because of these decisions it and I'll tell you even more than that
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when we were already assassed and the only way to use the tool was in
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WordPress because we only had the plugin connected to the SAS dashboard it didn't help much because then it's still a
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plug-in with a SAS or rather than right now we're more of a SAS with a plugin
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yeah and then there's other implications like um a open source that's not cool for
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investors uh much you know they don't like this model because you can protect your code you can't build a moat around
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your company um and uh and you can't really sell the
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technology that because it's the code is available we're selling our technology every day when we sell a plug-in you
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know um so um so that creates another challenge for them as well yeah
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um very directly um or Katie or Vito what do you what outcome do you think WordPress investors
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are actually looking for when they invest what is it that they want when they're investing in a WordPress product
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specifically right it's too obvious answer um a
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return on investment I don't know ultimately exit but at least a good
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income but I'm ideally a WordPress investor would be from within the industry and
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able to add that value on the growth and obviously veto you've got some very knowledgeable experience people from
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within WordPress that could be active which will help to accelerate the growth more than what they've put in
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financially hopefully and this one thing that's what vulva's follow-up here is
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very uh clarifying I think um like do you believe that a WordPress focused or a WordPress only plays enough
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to raise funds with or as it more of a transition to a SAS is it required to get investors so not necessarily if you
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position it in that way you just need to approach the different audience because VCS are probably going to be out of uh
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you know um Out Of Reach and even for for the Rays that we were doing and I was
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speaking to VC funds that I know that um is um invested in company is that I
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aspire to become if you will you know like companies that I look up to and so I reached out to their investors and I
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asked them if we can have a meeting and this kind of stuff right and a lot of them were like okay our Base ticket is
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eight million dollars uh you know to invest um we're not sure if you're there yet or
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what's the valuation that you're looking at it's like okay you're gonna buy the company a few times over at these
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numbers uh so um so so they play in a much bigger they are they're playing a
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much bigger game and but then the the the thought is not to just discourage or
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just drop the whole thing is who are the people that should be relevant and after
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doing a lot of discussions with BC then I'll I'll even share the story there there was an interesting story there
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that I can share later um around this um what I kind of got into the place
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after doing more than 50 calls with different VCS that um some of them were really interested
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but it was a nightmare to just work with them and they're a lot of back and forth
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and waiting and the mark and the market conditions are currently in this way and you know all of these kind of like uh
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wearing a tie kind of experience and you're talking to an analyst you're not talking to a human you know and so um so
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then I I thought about like okay so I get the money but I still need some guidance so the the realization was
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let's try and go to ex-founders that understand what we're what we're trying
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to do understand the value that we're already providing to users because uh um fortunately atarim has become rather
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known in the space over the past few years so it's an easier let's say sell to someone that already knows you that
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already trusts what you're trying to achieve and if you present a good business plan on top of it then awesome
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let's go and and do this thing together So eventually we end up with that or we
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actually said no to a bunch of VCS just so that we can work with people that are ex Founders
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um that can bring more than just money but also it's an experience nice that's
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a really interesting angle too for sure um great questions folks if you have
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more questions keep bringing them because uh we will keep putting your face up on the show and answering your
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questions so um Katie did we get to your why is this most important did we get to you yes
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we've done that yet okay cool uh story time then let's uh talk about our personal experiences with this uh
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subject in particular um I'll say from my perspective uh mostly
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the give WP story which I've told in a lot of different ways over the course of
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this show um we I I'll say we approached this whole question from uh the desire to
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grow the brand uh that was it that was it we were at a stage where we felt like
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we are doing what we want to do we are actually growing the revenue and the
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profitability and the team and the product in a way that we feel like is sustainable in the in in for the long
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term but we just can't do it fast enough um and we were just like ah we got so
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many big plans and Big Ideas um and we can get there but it might take us 27 years
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um so what can we do to actually accelerate our growth um and um we were looking into financing
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our company in a lot of different ways um and at the same same exact time that
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we started just looking into I would say debt options or financing options we had
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a lot of different folks actually just approach us and start and start basically saying that they're interested
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in investment and I I do feel like the time that we were interested was definitely the very kind of cusp
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beginning of this whole Avalanche of a lot of Wordpress Acquisitions right
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um and um and we kind of that meant that we talked to a lot of people or were approached by a lot of people and they
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all came to us with different intents and different motivations and different desires
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um and some of them I I really some of them I honestly felt like they just
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um used it as an excuse to like look under the sheets you know what I mean it's like
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um let's talk about um investment options and and then then you sign in DA's and then it's finances
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and then they're like all right have a good day that's a bad first date
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um uh others were like all right what does it mean to to buy you all out immediately and it's like whoa like
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that's too quick um uh and and others were just wanting to be
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um investors and not uh not act not acquire um and they all came with different
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intents and motivations um and um each one of them we had to weigh in in a different way
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um and with different pros and cons um at the end of the day as you know
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spoiler alert for the whole story everybody knows we got acquired by liquid whip um but um at the end of the day that
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decision was mostly because liquid web really did check all the boxes in terms of the goals that we had for investment
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in the first place we believed that by them acquiring us completely that we
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would then have the resources and the funding to do the things that we wanted to do
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um and uh and they without having a major change in our leadership or our product Direction uh because that's what
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they said they said we don't want to buy you because you need to be bought we want to buy you because you're successful and you know what you're
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doing like that message alone meant a lot to us um them acknowledging our success
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instead of being like Oh let's come and help this little WordPress product um so uh that that made a big deal
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um the at the end of the day while we didn't do Investments uh and direct
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exactly was it and this was just probably just the options that we had available to us
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um anyone who wanted to be an investor uh in the company um felt like they had
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um plans and intentions for the direction of our product and our business that we didn't know 100 for
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sure if that was what we wanted um and and that is a big factor I think in in terms of whether or not investment
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is the right option it's kind of like how Hands-On are these invest investors going to be how how
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much influence and direction are they going to um insert into the company or into the
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product versus how much resourcing and advice and investment are they going to
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give I really feel like it can be a give or take you know in in some ways
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so that's that's I don't know Vito I know that you've talked a lot with my my
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partner Devin too and so I don't know if that sound Rings true or is a different
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take on the story but uh yes well there's from what I saw from my personal experience
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um I didn't encounter many people that they said you should change it completely and just do that you know or
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no you know like I think it would be better if you steer it in that of this direction
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um that I you know like I was a bootstrapper all my life I think the the last job I had was when I was 16 you
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know so um so I wouldn't I can't have that you
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know what I mean yeah I I want I need to have the control to steer this in where my vision is uh is laid out but I laid
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it out to show everyone what is what is coming and then they're there to support that vision and if they have ideas then
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great then and I would listen to everything and I will implement a whole lot of them because they're good
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ideas but if it's not aligning with the with the north style or where I want to
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take the the company then it's probably not gonna go there yeah yeah yeah
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Katie what's uh what's your experience with this uh question before we go to mine I just have a question for you
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which is so when you either take investment or sell you're taking
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evaluation based on the current value um in order to grow further and I kind
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of get it if you're taking investment because you still have that majority stake and you gain from the growth in
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the future but with you mentioned how you had such big plans for the growth of giving future but you're not the owner
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anymore so even with like a short-term kind of deal with them you're not going
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to benefit from the value in 10 15 years I would assume in the same way as if you
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still owned it so I'm curious as to how that played into the decision yeah for sure I mean there's also going
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into it uh it was um we did lots of we beat up a lot of different uh Financial projections of
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like what if we did just do the investment route instead and what would our growth looked like and what would our our own profitability and take home
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look like uh compared to uh an all-out acquisition and things like that
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um and we took those into account once you do decide that like oh no this is going to be an acquisition instead you
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start to think about um the the objectives and the outcomes a little bit differently
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um and it also depends on the deal that you get like I I've talked with I think
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most of all of the really big WordPress acquisition Founders um uh over the last couple of years and
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they all got different deals and different details involved in what it looks like and what it means uh to to to
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be acquired by these bigger companies sometimes it's not exactly like uh that you are are just handing over the keys
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and just working there as like a lame duck leader it's it sometimes doesn't
31:30
include equity in the company it does sometimes include big payouts that uh that make a lot of big a big difference
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for the owners in the short term um which especially when that big payout
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for the owner in the short term is accompanied by a short contract um that then it kind of gets a lot more
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interesting so um all of those things have to be taken into account for like what makes the
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most sense uh for you at the end of the day I personally I wanted to keep going I wanted to keep working on give as much
32:01
as I could I love still being involved my involvement has changed a ton like at
32:07
this stage I'm I I'm I'm much less Hands-On than I've ever been
32:13
um which at the end of the day I actually am surprisingly really happy about
32:19
um I didn't expect to be happy about that um but it's because our give leadership
32:25
team is just stood up and just taken over in ways that I think are phenomenal and amazing I don't have to be uh really
32:33
deeply involved anymore I get to be involved at a level that I like and am comfortable with so did I
32:40
answer your question I feel like I did yeah that's really interesting yeah yeah so for my story time I thought I'll kind
32:47
of give the other perspective as to why I've never been interested in taking investment or selling or anything and
32:56
um a lot of Wordpress companies have a major lifestyle elements and
33:01
um one factor of that is independence and freedom and at band two we've always
33:07
grown as much as we can without compromising what we want lifestyle Wise
33:13
from the company and I've always kind of felt that um investment might compromise
33:18
that right um so for example in it was years ago way before covid like 2018 or something
33:26
I did apply for the wp beginner fund and got an offer and decided not to go ahead
33:33
with it um after talking with Andy my co-founder and we thought about and that we didn't
33:38
want to give up that freedom um it might have been the wrong investor
33:44
because they do have a certain way of doing things which we wouldn't necessarily have been comfortable with
33:49
like in terms of how they present sales or upsells or whatever so there probably
33:55
was a bit of a mismatch there but it wasn't just that it was things like when I talked to them about how you take
34:02
money out of the company I always just take money out when I want it like I
34:07
have to do legal stuff like dividends but if I want to like buy a property or something personally I just take the
34:14
money and nobody tells me not to and I suddenly realized that with an investor
34:19
we'd have to take sort of scheduled dividends and approve it and share it
34:24
out and all of that and I just we just saw no it's our money you know I'm sure
34:30
we're just very kind of small-minded in that and we have decided to grow less than we could
34:36
um as a result of this but um it is another perspective as well if you do value those choices but things
34:43
like what you spend the company money on um what your priorities are um and it of course as you said earlier
34:50
it depends on having the right investment but the other thing that put me off was taking money out at the
34:56
current value which was partly behind my question to Matt a minute ago so our offer was based on evaluation of like
35:03
450 000 and we're now worth like four times that or something so I'm very glad
35:09
I didn't sell 30 then because I don't believe that that would have grown Us by
35:15
more than 30 percent so therefore I'm just giving them money so for my mind
35:20
it's like if you have massive growth planned then investment can be a really good thing whereas if you're more of a
35:27
kind of Lifestyle company that's doing your best within certain parameters then maybe it's not so I just wanted to give
35:33
a different perspective really I love the perspective I think it's great I like that as well I think that
35:39
first of all 30 is a whole lot you know giving that up but as such a such an
35:45
early stage um is um you know without without the
35:52
um deciding for anyone else for me that would be a big No-No you know and we had
35:57
these these same offers in the early stage about uh this but you know it's a
36:03
third of the company that you basically lose so um Equity has a lot of meaning I do
36:09
agree with you Katie that um the dividend game is no longer a game you know uh
36:15
um like there's a there's a structure to it and um basically everything is invested mostly is invested back into
36:21
the company um in that way but it it really is aligning with the point of what are you
36:27
trying to do with your company because there's many ways to grow to to look at
36:32
a company it doesn't have to be a huge company it can it can be
36:39
um it can be great as a solopreneur just for yourself and and your loved ones and
36:44
it can be great for for as a small to medium business and supporting 20 30 50
36:50
other families you know that's that's a huge achievement on its own and that uh that doesn't require a lot of uh
36:57
external money but if you want to get to the automatic level they raise that much like 400 million or something crazy like
37:04
this and and I think yes please sorry and
37:11
there's a related question again vova he's always coming with all his uh his hard questions that's related a little
37:17
bit that I thought was uh worth talking about um after many conversations with WP product people about taking external
37:24
Capital One of the primary fears Founders have is losing control of their company veto do you feel like you lost
37:31
control I actually not I didn't lose any control no
37:37
um but I gained a lot more responsibility and that's what I'm I feel so on one
37:43
hand you're right that there is this uh as a bootstrapper you always have the kind of the chase of the of paying
37:49
salaries if you will or or making sure that uh you're you're profitable and this month is not that good what's gonna
37:56
happen in two months from now and that that kind of a daily concern that really was uh was just lifted you know that you
38:04
know that you have a nice cushion to grow with and it actually made
38:09
um when it comes to control I I felt that at that stage because I wanted to do so much I had a lot less control of
38:17
what I could do because um even things like working with some of the some of the big clients that that we
38:24
have required even basic things like changing our insurance uh setup to
38:30
accommodate Enterprise level customers and that would have been a 20K investment that needed to happen you
38:36
know and okay as a bootstrap this is a this is a big thing you can't do it straight away you gotta save for it or
38:42
you you gotta have some some kind of a budget lined up for a few months but if
38:47
you know that it's going to score the client and there is uh there's the money sitting in the bank then let's do it
38:52
let's let's move forward you know and let's do actually more of this now that we unlocked this new level
38:59
so it actually gave a lot more control in that way but I agree I understand
39:04
what Volvo is saying and it actually connects to my story of how we lost our
39:10
investment uh first before we actually secured it uh I don't know this story
39:17
so through the process of working with a bunch of those VCS early early on
39:24
um we got a solid offer from someone that said I want to take the whole thing the whole lot the whole round we're
39:29
going to invest the whole thing and let's get started and so they asked for documents and more documents and the
39:36
meetings and another meeting and you know it was months and months of uh due diligence and all those kind of things
39:42
and then um if you remember about a year ago a
39:49
uh the market changed there was a huge uh there was a huge stop in financial
39:54
markets so when it comes to uh to Investments and all VCS just stopped in
40:00
their place that's when all of the layoffs started happening in the big companies huge uh SAS companies that
40:07
were uh that that are even public companies lost 90 percent of their valuation uh within a span of a couple
40:13
of weeks that is literally less than a year ago that all this has happened and
40:18
we were at the stage where we already had a contract signed at that at that time and then they invoked Force Major
40:26
because of the market condition that hasn't happened in decades since the since the.com uh situation you know uh
40:35
to actually we were just waiting for the money to come in everything was just done and then they said let's talk in three
40:41
months for now we need to cancel this to see what's going on with the world you know regardless of the company
40:48
and at that point it took so long to get to that stage that I just tell them fine
40:53
let's talk in three months I never emailed them ever again and then I went on to find uh the channel in it to find
41:00
it in other places and that was like weeks from start to finish at that stage
41:05
and but a lot of it is because of the uh hurdles that I had to go through before
41:11
I was so prepared that it was a lot easier to pitch it to other folks and
41:17
just close it straight away but I feel that I dodged a massive bullet there in terms of control uh relating to what
41:24
Volvo was saying because if that was the process to get started and who knows
41:29
what they would have required for the ongoing absolutely oh my gosh that
41:34
sounded stressful and it's so hard to notice warning signs like that once
41:39
you're going through that process because you've got this sunk cost of all of the investment of time investment
41:45
you've already put in illegal and accountants and you know all this stuff
41:50
it's nearly over and then it will be fine it's only looking back I expect you realize that yeah 100 you you don't you
41:58
you just want to get it over with at that stage but um that was actually like a blessing in disguise that it happened
42:07
um and and um and then it connects to the valuation point that you were mentioning Katie because when when we
42:13
raised we weren't at a um the value the valuation that I asked
42:19
for was unreasonable it wasn't connected to reality if you will uh and and everyone was saying this
42:26
you know but it wasn't crazy but it was it was not connected to the revenue uh
42:32
and what we were actually making at the time um but what I basically pitched is here
42:37
is the plan here's the money that I need to execute on this plan and I'm not willing to give more than this amount of
42:43
shares uh so if that's cool that's cool let's continue the discussion if not that's fine you know that's that was the
42:51
that was my Approach at uh at that because I knew that I would probably need to do another raise to take us even
42:57
further next you know again looking at in Inspiration companies and things like that so the valuation doesn't have to be
43:05
tied to the exact Revenue right now because they're not buying the company they're investing in the growth of the
43:13
company if you buy a company you buy the asset but if you buy a part of it you're buying the potential that it can become
43:21
um so uh so that's that's a really small but big differentiation that
43:29
yeah that is really in insightful really helpful um for sure and uh
43:34
uh sometimes things like this I hope anybody who's thinking about investment or acquisition or things like that are
43:40
taking notes because sometimes the words like this you're like oh yeah that's interesting that makes sense but then
43:46
later you're like oh crap that makes a lot of sense [Laughter] um
43:52
nice hey well uh our last segment is always about our best advice um we always try to have a small
43:59
WordPress product shops in mind uh for this show uh trying to help everybody level up as much as they possibly can
44:05
and uh so we always close out with our best advice uh to you if you are interested in this subject in any way so
44:13
um Katie you're up first what's your best advice for small shops thinking about investment
44:18
my best advice is that well seeking investment can be a huge opportunity to really kick-start the growth of your
44:25
business but it's essential to partner with the right investor it's not just about getting the money and ideally find
44:31
someone who'll provide expert guidance to actively help you grow as well as the financial help and also I would say
44:39
think carefully about the permanent consequences because you are permanently fundamentally changing the structure of
44:46
your company and so you need to be aware of that and if that works for you then it can really help with the growth
44:53
absolutely nice Vito what's your best advice elevator pitch right so I would
44:59
say that um contrary to what some other people think I think that you need to raise
45:05
money when you're ready to pour some oil on an existing fire so you should have a
45:10
product that is already working you should have a plan that you know that that already has a small scale proof of
45:17
concept that that it can take you to where you want to get to and the plan will change even on the execution later
45:24
on as it often does in business and but at least you're coming in with uh with a
45:29
set um uh um process and it really is that it's a process of how do I take what we
45:35
have now and make it 5 10 100 times bigger than where it is uh at the moment
45:41
so that's the story that needs to be constructed first of all internally and even if you're not doing a raise it's an
45:48
awesome exercise to just um take some time and and think about these things things and writing them down creating a
45:55
pitch deck for yourself and selling there the future to yourself you know so I would suggest um first not rushing
46:03
this not just going without a business model and then starting company if you want to do this for the long run you got
46:09
to make sure that you have a solid product first we got one more question I'm gonna throw
46:15
it up anyway we're at the end but Nathan Nathan's a great person he's put
46:20
together some awesome products over the years um and uh California guy
46:26
um he has a good question here Vito how much work was it to put together the contracts for your raise did you hire a
46:32
lawyer or did you find a set of existing documents structured for what you were trying to do I did the ladder and then I
46:40
regretted it and I did it properly after and so uh so yes you gotta make sure
46:46
that you invest in a lawyer um this is 10 to 20K investment to go
46:52
through uh a process like this is what my experience has been from start to
46:58
finish and um but the the legal documentation is annoying as they are
47:03
and I don't like you know this these are the things that I don't enjoy in my day dealing with those with the contracts
47:10
and things like that um they are not a big part of it a lot
47:15
of the other things is straight up marketing creating a pipeline of people that you're going to be approaching
47:21
finding connections to them creating intros building networking opportunities
47:26
uh trying to build those relationships so that when you actually have the pitch they will listen to it creating sales
47:33
collateral material like a pitch deck and uh and the customers reviews and the
47:38
product showcases and creating a um an elevator pitch that you can
47:44
recite again and again and have it sound fresh but also updated for the person
47:50
that is sitting in front of you so it's very much similar to agency sales is
47:56
where I felt it was the closest uh um the closest analogy there and then
48:03
you know the contract like when you build a big website or a big contract for a website it's a contract you get
48:10
that out of the way but the getting there is is is was the more challenging
48:16
part really absolutely yeah that's that's related to my best advice is get your books in
48:22
order um a lot of Wordpress shops that I've um uh interacted with over the years
48:29
um they're you know they're they're kind of you know running loose uh and just trying to focus on building and um and
48:35
selling and uh not so much on uh the fine details of the business and um the
48:41
truth is uh investors or potential uh acquisition folks are either going to
48:46
just walk away if your books aren't in order or they're gonna tell you that you have to get your books in order so it's
48:53
one way or the other you're gonna have to do it um and the truth is um it just is better business when you
48:59
when you do that uh you start it small because then when like you're like oh once I'm big I'll get it no once you're
49:06
big it's too late once you're big it's so much more books it's so much more paperwork it's so much more work like
49:12
start it now immediately as quick as you can and get things in really like impeccable shape because then it gets
49:18
easier to maintain over the long term um and then when somebody's like hey what do you think about a little bit of
49:24
an investment then you're like I've got like 20 25 spreadsheets I could show you right now that will tell you why you
49:29
should invest um it's it gets a ton easier under those circumstances I I love that and I think
49:35
he was looking next to Nathan's uh he pushed another mainly looking for to learn what the actual Logistics are and
49:43
the materials so very much like you're saying Matt knowing all the numbers having projections in place uh even
49:49
building those sheets takes some time yes or even coming up with how they're how does how does these projections are
49:56
going to make sense so I just opened um like my folder here that that I
50:02
prepared for it and there's a few assets here like the executive summary uh users results our existing users growth and
50:10
ARR growth projections for the upcoming year uh product feature showcase which
50:16
is a deck the pitch deck itself three years execution plan and then you have the yearly Financial reports and things
50:23
like that but these are basically the documents awesome awesome just doing the numbers
50:29
is a really interesting experience actually when I um applied and then didn't even go ahead just being asked
50:35
things like what is your customer lifetime value and things that don't necessarily come out of these digital
50:41
downloads as a click you realize the problems with your data and that you should know this stuff so that's a
50:48
useful exercise on its own yeah yeah well now considering who owns Easy Digital downloads I feel like lifetime
50:55
value is going to be coming to those reports at some point or another I hope so at least um
51:00
internally but will we get the benefits I hope so I hope so I need them too
51:05
still so um cool well this was great Vito thank you so much for being here I learned a
51:12
ton myself um Katie I adore your perspective on this whole question and this whole
51:17
subject I know how independent I am I think it's great and I like I I mean
51:23
for as much as we talk about these things and like that whole like experience of like all these product
51:28
shops getting Acquired and whatnot I feel like folks were like oh crap why can't I get acquired don't get acquired
51:34
don't worry about it like do your business run what you're doing like I love what what Katie and Andy are doing
51:41
I love what uh Kim and Jason that uh paid memberships Pro is doing um like uh
51:46
folks are doing great work out there um next week uh we're going to be talking about using SEO to grow your
51:53
WordPress business uh we're bringing on Lindsay Halsey uh I'm excited uh I met Lindsay several years ago at a word Camp
52:00
um and uh she really knows her stuff on this front uh I think she has some really good insights for us for all the
52:07
product shops who are dependent on uh SEO for driving traffic and conversions so I'm excited to talk about it and
52:14
we're switching up posts uh we're rotating around next week Amber and Zach are coming up together they're on their
52:21
own we're like letting them loose they're gonna run the show we're going to see how it goes um I'm excited Katie are you nervous I
52:28
don't know they're going to be fine they'll be fine they're both great so they'll be fine they're Pros I'm like
52:34
you know I'm feeling all like Dad right now like we're talking about letting go of
52:40
control that's next week exactly I gotta let go it's gonna be great
52:46
well thanks again to post status and hit like subscribe all the helpful and nice
52:51
things for us and don't forget to tune in next week thanks everyone