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Learn how to secure investors and grow your WordPress product in this episode of Elevate Your Game. Our expert guests share valuable insights and strategies to help you take your business to the next level. Don’t miss out on this valuable resource for success.
0:22 [Music] 0:31 thank you 0:41 this is WP product talk the place where every week we interview an experienced WordPress product owner on strategies 0:48 tips experiences failures and successes of running a successful and thriving 0:53 WordPress product businesses and I'm Katie Keith co-founder and CEO at 0:58 barntube plugins and I'm Matt Cromwell co-founder of give WP and senior director of customer 1:04 experience at Stellar WP and today's topic is elevate your game 1:09 secure investors and grow your WordPress products I'm personally really excited to talk 1:15 about this one because it's honestly um kind of like a newer phenomenon I would say in the WordPress product 1:20 ecosystem uh WP products um were really not all that entrapment attractive 1:26 investment options in the past um and uh with the huge success of things like woocommerce of course uh 1:32 they don't have investment but they're a huge success um and Elementor and others like that 1:39 things have changed dramatically so now we even have investment funds like Amelia capital and wpbeginner 1:46 accelerator that are dedicated specifically to funding WordPress products so it's exciting times it's a 1:52 cool subject yeah and to talk to us today about this subject is Vito peleg 1:58 welcome veto to the show how are you 2:04 good good thanks for being here man my pleasure I have uh you just your whole 2:11 environment there just is really fun because uh I'm still remembering you 2:16 live at cloudfest I I need to I need to post that video yeah we've all seen the video yeah 2:24 Set uh in concert at cloudfest and I had a couple really really killer solos man 2:30 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 2:37 uh a business or wordpressing without being in a band so that was really nice 2:43 uh to have some friends from uh you know from from the current life you know 2:49 seeing some of the things from the previous life you know yeah if only music paid as well as WordPress right 2:54 tell me about it we wouldn't be here you know none of us 3:00 would have that's right yeah I'd be doing something else too 3:07 um hey folks if you are here watching on YouTube um that chat is open and we'd love to 3:12 respond to your questions or comments or feedback or anything so uh uh but let's kick us off 3:18 um we always want to start first by talking about what's uh so what's such a 3:23 big deal about this subject why is this so important um so veto uh we want to give you the 3:29 honor um maybe if you don't actually first give us just give everybody we know who you are but give everybody a 3:35 little bit of a background of who you are what you do and why did we bring you on to talk about this right 3:41 um so uh I run a company called adorem.io I'm the co-founder and CEO and 3:47 we started or I I think I started my or when I see my journey starting as um as 3:54 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 4:00 money from the side that route to a small freelancing business and then eventually once uh I turned 30 and it 4:07 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 4:15 built an agency and through that experience I I tried to fix my own 4:21 problem of collaborating with clients and getting on the same page with them and that was the basics of what became 4:29 WP feedback which is a plug-in that later evolved into adirin which is the SAS platform with a focused WordPress 4:37 plugin um that helps teams collaborate internally as well as externally with 4:42 clients and stakeholders and things like that then we also uh did a raise uh 4:48 recently about a little less than a year ago a few of our friends in the WordPress space and even your co-founder 4:56 their Matt joined us on this uh on this last or the first round 5:02 um which was really exciting to see people that you know from events and you know from just hanging out in the space 5:09 um being in that position where they can help Founders take things to the next level in that way so as you mentioned in 5:16 the intro this is a really emerging subject and I've been looking into this 5:21 um really from the inspiration that you mentioned regarding Elemental and tools like that and how they did it and I even 5:29 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 5:35 some of the stuff that I learned because it wasn't an easy process but yeah for 5:40 us it was the right thing to do absolutely nice yeah I mean I I do feel 5:45 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 5:53 as as an approach to scale your business um and uh I and and doing it 5:59 successfully uh from all outward appearances um and then there's also of course been 6:04 others um and uh we actually Amber Heinz is uh on uh one of our co-hosts and she has uh 6:12 uh secured some investment from Amelia capital in particular so 6:17 um it's it's definitely coming uh and it's a it's an interesting one so 6:22 um Vito what's your take though why is this so important for WordPress product owners in general why is this something 6:28 that they all should be thinking about or getting uh informed about so I think that um it might not be really important 6:35 it really is dependent on your goals and what you're trying to take where you're trying to take your business uh because 6:42 um raising money has a lot of uh implications that come along with it 6:48 mostly for from being then um being the right 6:53 Shepherd of this of these funds and to make sure that you know how to leverage 6:59 this in the right direction to give yourselves as well as your 7:05 investors a good Roi or a good return on their investment in that way so thinking 7:10 in this direction um what it did for me initially it first of all it opened my mind to what does 7:16 that even mean and if even if you're not looking to raise money and but you are looking to sell the product eventually 7:23 preparing it for a raise is a very similar process only that if you're doing it right now rather than later on 7:30 that that that gets you thinking in the right direction for for being ready for 7:35 a later acquisition as well yeah nice absolutely gosh that's really 7:42 good Insight I mean this is a subject that I do try to inform myself on uh a 7:47 bit and it is something that uh uh definitely have looked into we'll talk about that a little bit later but uh 7:52 it's really really helpful for us to have somebody like you on who really has hands-on experience with it so yeah and 7:59 you've done the same thing with uh with selling give so there's probably 8:04 insights in that way that really connect to the fundraising side of things yeah 8:10 absolutely for sure um overall for me I think this one is so 8:15 important for folks because in in a lot of ways there's 8:20 um there's a lot of ways to go from zero to uh 8:26 what's the best way to say it zero to zero to sustainable zero two I'm not 8:32 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 8:39 to be in when you're building a product um getting past the like I have to worry 8:44 about paying my bills part is is always like ah once you're past that and you're 8:49 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 8:55 have some confidence in what you're doing and and uh it just changes the way that you think about everything you do 9:01 so I do think that like investment uh is a good option uh is one good option to 9:08 help bridge that and ideally push way past it because ideally you want investment to be able to do a lot more 9:15 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 9:22 be so worried and concerned about whether or not you're going to go bankrupt tomorrow or not yeah 9:27 um that's one one big reason why um the other one is just just simply that it's an opportunity that is 9:34 available that like I said before that wasn't really before um and any opportunity that business 9:40 owners have to expand their business and grow their business they should take seriously 9:45 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 9:52 really just bootstrapped or been solopreneurs and things like that sometimes they them they might even be 9:57 like ah why would I take other people's money they might have a negative connotation even to it 10:02 um but I'd really encourage folks to get over that and just at least get a lot more informed and understand how it 10:09 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 10:15 where I come from from a little bit so I don't know does that make sense for veto or am I 10:20 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 10:27 go bankrupt I think it actually increases your chances of going bankrupt yeah there is that threat too yes you 10:34 know because you're you're intentionally increasing your spend as opposed to when you're on when you're a bootstrapper and 10:40 when you're bootstrapping you're very conscious of these things and making sure that you are always within profitability 10:47 um and you just grow slower but you take those steps but then when you when you 10:53 raise money you have a large sum to spend exactly on growth and so what 10:59 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 11:06 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 11:12 is going to work it can alleviate a lot of stress that's that's yeah that's 11:17 helpful context I appreciate that um Katie what's your take 11:23 yeah so at Barn two we've always been completely bootstrapped and um I'm 11:29 interested in learning more really about what would be the benefits at different stage of the company life cycle I see 11:35 Nathan's added an interesting question as well uh what stage about raising because it does have permanent 11:42 consequences that have always kind of put me off personally about the um reduction of control and of having 11:49 investors because they are not entirely Your Own Boss in the same way so I'm interested in learning about the pros 11:55 and cons and helping other people do the same nice I didn't even notice this this is a 12:02 great one let's bring it up already uh since it is directly directed at Vito Vito do you mind talking a little bit 12:08 about this of course so we were bootstrapped for about three years before we did the race and so we already 12:14 had um uh thousands of customers uh that were using uh the platform and tens of 12:20 thousands of installs of uh you know on the websites um before we actually got into that step 12:27 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 12:34 is to answers Nathan's Point here did you have a workable prototype it was more than a prototype we I felt it at 12:41 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 12:49 big you know and really what I and and I think it's a it's a good place to frame 12:55 that my goals are are are are are rather big know in terms of where I want to 13:02 take the company and Volvo was mentioning here about 1 billion exits and things like that so I'm 13:09 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 13:16 eventually from uh from the company um it's not far-fetched many people have 13:22 done this before it's just a matter of focusing and thinking in this direction and so when I did the calculation of how 13:28 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 13:33 are enjoying it that it's useful to them uh how how do I get into that stage so 13:39 it what I really figured is that if I'm Gonna Keep at that current rate it's going to take 67 years 13:45 to get to my goal and uh you know in the olden days that's how people did it they 13:50 actually built generational companies to get to those stages uh but now we use 13:55 money as an accelerator and so that's one was one of the uh one of the drivers 14:01 there already nice yeah we have uh quite a few good uh comments and questions here vova uh who 14:08 has been on the show before is asking good as saying some good comments and asking some good questions too I'm gonna 14:13 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 14:20 the way folks if you don't know traditional VC investors are often are after unicorns because they need that 14:26 one billion dollar exit to compensate for the rest of the failures true um that's I I I can sympathize with that 14:33 absolutely and for those who might not understand like unicorns are essentially the folks who kind of are the Jack of 14:39 all trades that kind of do all the things they're product Builders they're marketers they're developers they uh 14:46 they have a good business Acumen um all kind of all the above um is the 14:51 kind of folks that they're looking for well the actual um in in fundraising talk unicorn is 14:57 really around the 1 billion Mark um company their evaluation has reached 15:02 1B million that's that's when you become a unicorn you know got it got it good clarification too 15:08 thank you um but uh one more question from vova 15:13 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 15:20 going through this process I went through a lot of discussions with traditional VCS and 15:27 um and I even tried to go or explore this uh this channel uh early on in the 15:33 days of the product um the world changed my mind because kovid hit at the same time as I was 15:39 starting to do Outreach and they said all right let's just focus on what we have here for now and then revisit this 15:45 idea later um but when I had these discussions uh early on when we were 15:51 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 15:58 challenging uh um traditional VCS they don't see WordPress as a significant 16:04 space to invest in and one of the metrics or the reasons why I think that 16:10 this is uh happening is because they look at the biggest exits that happened in our ecosystem and let's say and you 16:18 mentioned woocommerce as one of the biggest exam or woocommerce is a huge success story in the WordPress space 16:26 um but if you look at how much they sold the company for compared to the valuation of Shopify even though they 16:32 are like three times on the market share um and then then it's peanuts you know 16:38 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 16:45 then though I feel like a lot of folks felt like they sold for less than they should have sold for probably very much 16:52 yes exactly and I think that this even goes it carries out to even recent exits 16:58 that happen in the space um you know I think that that um some of 17:04 us here on the panel know some of the numbers even behind the scenes of some of the companies that have sold so it 17:09 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 17:16 about an acquisition or this this person is now they went public and you know those kind of stories uh it's not in 17:24 these it's not even close to this reality and so when when you need to 17:29 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 17:37 um a business that already was proven uh this category was proven to generate 17:43 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 17:51 you know yeah the multiples are very different aren't they in WordPress versus 17:56 um Tech more generally which is a shame and I think it's improving but very slowly but of course atherim is a SAS 18:03 isn't it so it's a bit different yes well you became a SASS and which like I 18:09 think this is what's so interesting too is like part of our conversations that we've been having we've had a couple 18:14 different conversations on the show about uh WordPress plugins versus SAS yeah should you sassify and things like 18:20 that it sounds like you decided to change your plugin to a SAS specifically 18:26 for the investment angle is that right no so there wasn't it wasn't connected to that specifically it was mostly 18:32 because users um so the plugin what it does it adds stickers to a website like Post-it notes 18:39 on an actual website kind of thing and then as we started people were saying okay but I have 50 website 200 500 18:47 websites what do you expect me to go into each website and see who left comments where and all of those kind of 18:53 things so we realized we needed a centralized experience to bring in all 18:58 of these communications uh it was purely user-led at the early stage of it but it 19:04 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 19:10 when we were already assassed and the only way to use the tool was in 19:16 WordPress because we only had the plugin connected to the SAS dashboard it didn't help much because then it's still a 19:22 plug-in with a SAS or rather than right now we're more of a SAS with a plugin 19:28 yeah and then there's other implications like um a open source that's not cool for 19:34 investors uh much you know they don't like this model because you can protect your code you can't build a moat around 19:40 your company um and uh and you can't really sell the 19:45 technology that because it's the code is available we're selling our technology every day when we sell a plug-in you 19:52 know um so um so that creates another challenge for them as well yeah 19:59 um very directly um or Katie or Vito what do you what outcome do you think WordPress investors 20:06 are actually looking for when they invest what is it that they want when they're investing in a WordPress product 20:11 specifically right it's too obvious answer um a 20:16 return on investment I don't know ultimately exit but at least a good 20:21 income but I'm ideally a WordPress investor would be from within the industry and 20:28 able to add that value on the growth and obviously veto you've got some very knowledgeable experience people from 20:35 within WordPress that could be active which will help to accelerate the growth more than what they've put in 20:40 financially hopefully and this one thing that's what vulva's follow-up here is 20:46 very uh clarifying I think um like do you believe that a WordPress focused or a WordPress only plays enough 20:54 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 21:02 position it in that way you just need to approach the different audience because VCS are probably going to be out of uh 21:09 you know um Out Of Reach and even for for the Rays that we were doing and I was 21:14 speaking to VC funds that I know that um is um invested in company is that I 21:21 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 21:28 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 21:34 eight million dollars uh you know to invest um we're not sure if you're there yet or 21:39 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 21:45 numbers uh so um so so they play in a much bigger they are they're playing a 21:51 much bigger game and but then the the the thought is not to just discourage or 21:57 just drop the whole thing is who are the people that should be relevant and after 22:02 doing a lot of discussions with BC then I'll I'll even share the story there there was an interesting story there 22:07 that I can share later um around this um what I kind of got into the place 22:13 after doing more than 50 calls with different VCS that um some of them were really interested 22:19 but it was a nightmare to just work with them and they're a lot of back and forth 22:25 and waiting and the mark and the market conditions are currently in this way and you know all of these kind of like uh 22:31 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 22:40 then I I thought about like okay so I get the money but I still need some guidance so the the realization was 22:47 let's try and go to ex-founders that understand what we're what we're trying 22:53 to do understand the value that we're already providing to users because uh um fortunately atarim has become rather 23:02 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 23:08 already trusts what you're trying to achieve and if you present a good business plan on top of it then awesome 23:15 let's go and and do this thing together So eventually we end up with that or we 23:22 actually said no to a bunch of VCS just so that we can work with people that are ex Founders 23:29 um that can bring more than just money but also it's an experience nice that's 23:35 a really interesting angle too for sure um great questions folks if you have 23:41 more questions keep bringing them because uh we will keep putting your face up on the show and answering your 23:46 questions so um Katie did we get to your why is this most important did we get to you yes 23:52 we've done that yet okay cool uh story time then let's uh talk about our personal experiences with this uh 24:00 subject in particular um I'll say from my perspective uh mostly 24:06 the give WP story which I've told in a lot of different ways over the course of 24:11 this show um we I I'll say we approached this whole question from uh the desire to 24:18 grow the brand uh that was it that was it we were at a stage where we felt like 24:24 we are doing what we want to do we are actually growing the revenue and the 24:30 profitability and the team and the product in a way that we feel like is sustainable in the in in for the long 24:36 term but we just can't do it fast enough um and we were just like ah we got so 24:42 many big plans and Big Ideas um and we can get there but it might take us 27 years 24:50 um so what can we do to actually accelerate our growth um and um we were looking into financing 24:58 our company in a lot of different ways um and at the same same exact time that 25:04 we started just looking into I would say debt options or financing options we had 25:10 a lot of different folks actually just approach us and start and start basically saying that they're interested 25:16 in investment and I I do feel like the time that we were interested was definitely the very kind of cusp 25:23 beginning of this whole Avalanche of a lot of Wordpress Acquisitions right 25:28 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 25:34 all came to us with different intents and different motivations and different desires 25:40 um and some of them I I really some of them I honestly felt like they just 25:45 um used it as an excuse to like look under the sheets you know what I mean it's like 25:50 um let's talk about um investment options and and then then you sign in DA's and then it's finances 25:57 and then they're like all right have a good day that's a bad first date 26:02 um uh others were like all right what does it mean to to buy you all out immediately and it's like whoa like 26:09 that's too quick um uh and and others were just wanting to be 26:14 um investors and not uh not act not acquire um and they all came with different 26:21 intents and motivations um and um each one of them we had to weigh in in a different way 26:27 um and with different pros and cons um at the end of the day as you know 26:34 spoiler alert for the whole story everybody knows we got acquired by liquid whip um but um at the end of the day that 26:41 decision was mostly because liquid web really did check all the boxes in terms of the goals that we had for investment 26:47 in the first place we believed that by them acquiring us completely that we 26:53 would then have the resources and the funding to do the things that we wanted to do 26:59 um and uh and they without having a major change in our leadership or our product Direction uh because that's what 27:06 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 27:11 doing like that message alone meant a lot to us um them acknowledging our success 27:16 instead of being like Oh let's come and help this little WordPress product um so uh that that made a big deal 27:24 um the at the end of the day while we didn't do Investments uh and direct 27:30 exactly was it and this was just probably just the options that we had available to us 27:36 um anyone who wanted to be an investor uh in the company um felt like they had 27:43 um plans and intentions for the direction of our product and our business that we didn't know 100 for 27:51 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 27:57 is the right option it's kind of like how Hands-On are these invest investors going to be how how 28:04 much influence and direction are they going to um insert into the company or into the 28:10 product versus how much resourcing and advice and investment are they going to 28:16 give I really feel like it can be a give or take you know in in some ways 28:23 so that's that's I don't know Vito I know that you've talked a lot with my my 28:29 partner Devin too and so I don't know if that sound Rings true or is a different 28:34 take on the story but uh yes well there's from what I saw from my personal experience 28:41 um I didn't encounter many people that they said you should change it completely and just do that you know or 28:46 no you know like I think it would be better if you steer it in that of this direction 28:52 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 29:00 know so um so I wouldn't I can't have that you 29:05 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 29:12 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 29:19 great then and I would listen to everything and I will implement a whole lot of them because they're good 29:26 ideas but if it's not aligning with the with the north style or where I want to 29:32 take the the company then it's probably not gonna go there yeah yeah yeah 29:39 Katie what's uh what's your experience with this uh question before we go to mine I just have a question for you 29:45 which is so when you either take investment or sell you're taking 29:50 evaluation based on the current value um in order to grow further and I kind 29:56 of get it if you're taking investment because you still have that majority stake and you gain from the growth in 30:02 the future but with you mentioned how you had such big plans for the growth of giving future but you're not the owner 30:09 anymore so even with like a short-term kind of deal with them you're not going 30:14 to benefit from the value in 10 15 years I would assume in the same way as if you 30:19 still owned it so I'm curious as to how that played into the decision yeah for sure I mean there's also going 30:27 into it uh it was um we did lots of we beat up a lot of different uh Financial projections of 30:34 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 30:41 look like uh compared to uh an all-out acquisition and things like that 30:46 um and we took those into account once you do decide that like oh no this is going to be an acquisition instead you 30:53 start to think about um the the objectives and the outcomes a little bit differently 30:58 um and it also depends on the deal that you get like I I've talked with I think 31:04 most of all of the really big WordPress acquisition Founders um uh over the last couple of years and 31:10 they all got different deals and different details involved in what it looks like and what it means uh to to to 31:18 be acquired by these bigger companies sometimes it's not exactly like uh that you are are just handing over the keys 31:25 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 31:36 for the owners in the short term um which especially when that big payout 31:42 for the owner in the short term is accompanied by a short contract um that then it kind of gets a lot more 31:49 interesting so um all of those things have to be taken into account for like what makes the 31:55 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
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