Scaling Up with Acquisition: How Buying WordPress Products Can Boost Your Business

[00:00:00] Katie Keith: This is WP Product Talk, the place where every week we interview an experienced WordPress product owner on strategies, tips, experiences, failures, and successes of running a successful and thriving WordPress product business. I'm Katie Keith, co-founder and CEO at plugins.

[00:00:38] Amber Hinds: And I'm Amber Hinds, CEO of Equalize digital.

[00:00:41] Katie Keith: And today's topic is scaling up with acquisition, how buying WordPress products can boost your business.

[00:00:49] Amber Hinds: I am super excited about today's show because I think it'll present a different look at how you can be a product owner, um, rather than. Uh, rather than growing your own, you could purchase it. That's something either to start becoming a new product owner or grow your existing portfolio.

[00:01:08] And I think it might also be a little interesting if you're thinking about selling, 'cause you'll get a look at what a buyer thinks about too.

[00:01:15] Katie Keith: Cool.

[00:01:16] And to introduce our guest today, we have a, oh, that script is wrong. I apologize. So I'm going to introduce our guest, who is Keanan Koppenhaver. So, hi Keenan and welcome.

[00:01:28] Thanks for coming on the show.

[00:01:29] Keanan Koppenhaver: Hi y'all. Thanks for having me.

[00:01:31] Katie Keith: So to get started, could you introduce yourself and what you do?

[00:01:36] Keanan Koppenhaver: Sure. Uh, my name's Keanan Koppenhaver. I'm the co-founder of an agency named Alpha Particle. We do largely, uh, WordPress work anything from small sites all the way up to the bigger clients and publishers hosted on WordPress, VIP.

[00:01:48] Um, and for the past couple years we've been experimenting with, uh, acquiring workplace plugins to kinda augment our agency business.

[00:01:57] Amber Hinds: And, uh, what, uh, plugins do you own?

[00:02:00] Keanan Koppenhaver: So, at the moment, uh, Kanban for WordPress, which is basically, uh, a Trello board inside of a, a WordPress side for people who don't want to use another tool for project management or, um, just kind of managing things. Uh, and then two more developer focused plugins, WP Pusher and, uh, a Saas tool called Branch ci, which is continuous integration and deployment.

[00:02:20] Amber Hinds: Well, we're excited to have you here. Uh, if you are watching on YouTube, please leave us some comments in the chat. We will be watching those and responding to them throughout the show.

[00:02:34] Katie Keith: Yeah, definitely. And we love to get comments, um, because we can actually respond live. So, um, if you want input and answers, then leave your comment now.

[00:02:43] Um, so the first section that we get onto, um, each week is why is it such an important topic for WordPress product owners? And that is the wrong caption. So I will just edit that. Um. We're, we're having lots of fun this morning, apparently. Yeah, we're experimenting with the tech. Um, coming soon. We've got a new website as well, so that will be really exciting.

[00:03:09] So it all change here and apologize for the teething problems. So I'll start by talking about why it's such an important topic. Well, there's two main ways to get WordPress products to sell. Of course, you can build a new one as Amber touched on earlier, or you can acquire an existing one. Um, which route to take is a really important decision for WordPress product owners.

[00:03:32] Um, but of course you may not have had it. Experience of acquisition yet either acquiring or being acquired. And here we are mostly focused on the acquiring side of things. So it's therefore important to talk about the pros and cons and how to go about it if you do decide to go by the acquiring route.

[00:03:50] So, Keenan, what about you? Um, why do you think it's such an important topic?

[00:03:55] Keanan Koppenhaver: Yeah, I think for us, um, you know, there obviously like when you're in an agency setting, you're busy with client work and, and kind of the ongoing demands of that. And so, um, you know, over the years, I think like most people who do client work, we have, you know, kicked around various product ideas and, um, we, we have this thing that we try to do every week that we call Hack Friday, where basically Friday afternoon, uh, we kind of put all our client work to the side and all get on a Zoom and do, um, some pair programming.

[00:04:21] Work on ideas of our own that, that we have. But um, we were finding just it kind of very difficult to get any of those products kind of over the line from zero to one and, um, release them and launch them and get any sort of traction. And so, um, we had a bunch of ideas and, and things that we were recommending to our clients for their own products and, and tools.

[00:04:41] And so our thinking was okay if we have, if we see a product that's already working, um, that solves the kind of zero to one problem, and then we can just apply. Um, the same strategies that we're giving to our clients, to this product that, that we also own.

[00:04:55] Amber Hinds: Yeah, I, I think, I think that's really interesting, you know, that you had some challenges of getting your own to grow and so you thought about jumping and I think a lot of people probably have been in that space.

[00:05:06] Maybe they've tried to start something or they aren't sure where to start, and it seems like a good ramp. Um, I think this show or why you really wanna think about it if, whether you're already in. Two products and you have your own that you've grown or you are just thinking about getting into products by purchasing an existing one, is that there's probably a lot of considerations that have to be put into maintenance support marketing of a product that you haven't built yourself.

[00:05:38] I think it's a little bit more forgiving to a degree when you're just kind of organically doing that from zero to nothing but purchasing a product where maybe there are support needs. Right out the door because there's a lot of customers, maybe not just, you know, one or two that you get in the beginning when you're first, um, releasing your own product, uh, or that a marketing machine that needs to be fed in order to maintain purchases.

[00:06:04] That's a lot that needs to come into it. And, and I think sometimes we think, oh, well, if we just buy a product, that's an easy way to increase our bottom line and our revenue. But that may not be necessarily. Quote, easy growth just by like jumping ahead in the on-ramp. So I think you need a solid plan and, and I think we're gonna be talking about things today that really touch on that.

[00:06:30] Katie Keith: Cool. So let's move on to the story time section where we each talk about our personal experiences of acquiring WordPress products. Uh, Keenan, do you want to get started?

[00:06:41] Keanan Koppenhaver: Sure. Yeah. So this is something we had been, uh, considering for a long time. I just, 'cause I'm kind of a nerd that way, have had been subscribed to a bunch of different mailing lists of, um, like business brokers and things for, for a while.

[00:06:52] And so, um, we started really considering this as a, as a viable thing that we wanted to take on. Uh, we started focusing in on like WordPress products that were for sale, um, and had a couple false starts of like products we thought would be good fits for us. And, you know, either didn't work out for one reason or another.

[00:07:09] We tried getting, you know, more traditional financing from Chase and then things like, well, the business was founded in Ukraine and so they don't have US tax returns, and Chase didn't wanna lend against that and, and stuff like that. Um, just kind of kept coming up. And so, um, after kind of two or three near misses, basically what we did is, is sat down and said, okay, here's essentially the profile of.

[00:07:31] The business that we're trying to acquire. We don't really want to deal with anything that, uh, uses like page builders or like plugins for page builders, just because that's not the way that we build sites. Um, you know, extensions to things like WooCommerce or other kind of plugins. Like that would be fine.

[00:07:47] Um, developer tools would be okay. Like we, we kind of really narrowed down. Here's the kind of plugin we would wanna buy. Here's the revenue range that we're probably comfortable with. Um, here's essentially like the, the price range that we're looking for. Um, and basically just put all of that into a tweet thread and sent it out and said, okay, like, share this as widely as possible, um, and see what we get.

[00:08:08] We got, we got three or four really interesting, um, offers of people that kind of saw that and said, well, you know, I wasn't really thinking about selling this, but. I guess like it fits pretty perfectly into what you guys are looking for. Um, let's, let's have a conversation. And so, um. One of those was a friend of mine, Corey Mass, who owned Theban for WordPress plugin.

[00:08:26] Um, and I remember actually going to a talk of his at Word Camp Nashville, my very first word camp, where he was talking about how he started the business. And so it's kind of a cool, like full circle moment for, for us. And, um, basically yeah, that, that fit right into our criteria of what we had outlined in the tweet.

[00:08:41] And, um. And so after a kind of a couple weeks of, of back and forth conversation, um, we agreed that it was a, a good fit for us to move forward. So, um, we did some due diligence and um, you know, kind of went through that whole process. But, uh, it was a relatively smaller sale, so it was like an all cash transaction.

[00:08:59] We just didn't do escrow or anything like that. Um, and so because we already had that, you know, working relationship and we had known each other, it was, it was a pretty seamless transaction. Um. And so that was, yeah, I believe April or May of 2021. Um, and after kind of just probably about a month of, of back and forth, um, we were the, the proud new owners of, of combat for WordPress.

[00:09:21] So, um, from there just kind of decided that was going to make as much information about this public as possible. And so started writing about it and, and sharing, um, our experiences with the whole process. Um. And then got a message, uh, on Twitter from somebody else who was looking to sell, uh, WP Busher and, and Branch Ci.

[00:09:42] His name was Peter, uh, zoom. And that was a much bigger transaction. So there were a lot more kind of back and forth details that we can, we can get into there. But, um, after of a couple months of that, uh, and some wrangling of Stripe migrations, uh, that acquisition closed in, in September of 2021. So, um. At that point, we kind of just took a step back and said, okay, like, let's see how this goes.

[00:10:03] And um, that's where we discovered all of the things that Amber was touching on earlier with the, the need for like, on-ramping to support right away. And, um, trying to figure out, you know, what, what pieces you need to improve and change and what's working and kind of how, what direction you wanna take things.

[00:10:17] So,

[00:10:20] Amber Hinds: yeah, so I, I think it's, it's interesting. I, I kind of wanna follow up a little bit. I don't know, obviously you probably don't wanna share full details, but do you have any tips for someone who's maybe. Thinking about buying, like from your experience on like how you even value a plugin and decide if it is one.

[00:10:38] When you were looking at them, how did you know beyond that they're in this category? Okay. You're like, okay, that's a fit for us. But how did you know how much to pay for it and invest in it and what that line was?

[00:10:51] Keanan Koppenhaver: Sure. I think it really depends on like your comfort level and, and how mature the business is, right?

[00:10:55] A lot of the plugins that I've seen change hands over the past few years. Um, have been very much like, okay, this is a side project that this person has kind of just been working on a couple hours a week. Um, there's not sort of any consistent marketing channel or there's not a ton of customers. Maybe there's just, you know, one big customer or you know, two or three smaller customers and it's still kind of growing.

[00:11:17] Um, for, like, all of those things mean that there will be more work to do on your side as, as the acquirer. So, um, those would probably be on the, the lower multiple range. Um. On the flip side, if it's a plugin, um, like WP Pusher was, was a lot more mature. It had, you know, triple digits worth of customers. Um, there was like strong organic traffic from Google because of blog posts that were written.

[00:11:40] There was a ton of stuff on, like written on it around the internet. Um, so that was a mu it was much more of a kind of business with, you know, marketing flywheels and more incoming revenue and stuff like that. So, um, I think it's kind of. Both. You have to decide where you're comfortable with in terms of how mature of a business or product you want to invest in, but also understand that the, the further you go up that range, the, the higher multiple, you probably be expected to pay for that.

[00:12:09] Amber Hinds: Yeah, so I think that that kind of goes a little bit towards my personal experience with buying a plugin, which is that I have not, however, my partner. Chris and I in um, 2015, we actually got into some serious conversations about purchasing a Genesis food blogger theme. So not a plugin, but a theme product.

[00:12:36] Um, we. We did not have the cash to cover it. So we had some conversations with banks at the time. Um, and then also we lived in the state of Colorado and they have some really good grants for, um, businesses that are looking to grow and different programs through the SBA, the small business administration in the United States.

[00:12:58] So, um, so we had some conversations there and what ultimately stopped us was actually. Looking at the, the revenue of the product. So, you know, we, we looked at things like what was their growth? You know, how many sales were they making over time? And then, um, how was the revenue changing? And one of the things that we saw was we actually thought that they were at a peak in their revenue.

[00:13:26] Um, and, and it's hard, it's kind of hard to assess, but I think this maybe happens a lot more commonly with themes than it does with. Plugins. Um, because if the theme isn't really actively responding to changes in core WordPress, or this was a child theme for Genesis, um, which, so if it's not responding to the direction that the, the parent theme is going, like that's another area where.

[00:13:55] It can fall behind. And I think there's, especially with themes like a big burst, when a new theme is released, it sees growth and then eventually it, it peaks and it falls off and the sales stop. And it's not the same sort of recurring business that you might see. And for us, it seemed like it made sense because, uh.

[00:14:17] Our prior business, our agency was a lot more focused on food and we did a lot of food marketing. We had, um, CPG clients because my husband has a background in culinary and we were kind of like, this might be fun. We already did a lot with Genesis at the time, so it felt like something that made sense and we knew we wanted to have a product at some point in time, and so we thought, Hey, this might be a good way to get a product that we know.

[00:14:43] Um. I think at that time I was our only developer, but I was like, Hey, I know how to code custom Genesis child theme, so I'm not worried about the maintenance of it, right? I'm not worried about buying code that I don't know how to maintain. Um, but we, but we ultimately went off 'cause we were looking at it and we were thinking, no, I don't, we didn't think that the long-term financials were there.

[00:15:04] So I really think it is important, um, to spend a lot of time looking at the trajectory. I think right now with. Plugins, especially if they're a freemium plugin with a free version on.org, that's probably gotten more challenging because you can't see active install counts in the same way that you could a year ago.

[00:15:24] Um, yeah. And so, but I think, you know, like that, that's sort of been our experience is we tried, we thought we were going to, and then we ended up after we did a bunch of diligence being like, no, this product isn't right. How do you feel now? Was it the right decision? Oh, 100%. Excellent. Yeah, it was definitely the right decision, I think.

[00:15:47] Um, I don't know, just seeing the direction that WordPress is going in general, I don't know if I would ever want to own a theme. Mm-hmm. I agree

[00:15:57] Katie Keith: actually.

[00:15:58] Amber Hinds: Yeah, it's, there's just a lot that is shifting and even now, like even if you were to go to studio press.com. Almost all of the child themes that they, that studio press themselves had for Genesis have been deprecated and removed.

[00:16:13] There's only a very small number and, and just the whole direction. So like if we had, if we had invested in that, I don't think it would've been a good investment. Perhaps. I think we might have made our money back, but I don't think it would've been a long-term product that gave. Um, that really kept giving and allowed us to boost and grow.

[00:16:34] Uh, and so I think, you know, I'm, I'm glad we didn't buy it.

[00:16:43] What's your experience,

[00:16:43] Katie Keith: Katie? So, uh, I, for years I wanted to acquire something and until recently I never had. So this is really great timing for me to share my story as a first time acquirer. Um, the reason I wanted to do it was largely, um, just because it was a gap in my business experience. Um, I've built lots of products, 20 plus and, uh, from nothing, uh, with my team, but I had never, um, taken over somebody else's product, so I just felt it kind of was a.

[00:17:16] Something I, uh, would benefit from in terms of personal growth as much as financial. Um, so I, my husband Andy and I, who I run BARM to with, had had our eyes open for a while and we'd, uh, registered for things like, um, flip WP and so on to find out about opportunities. And we looked at lots and nothing felt quite right.

[00:17:38] As what we do is fairly specific, um, which is generally WooCommerce extensions that add a specific feature to WooCommerce. And so we wanted something that was like that. And I also had a few other boxes I wanted to tick such as, um, I, I. Thought I, I'm, we are very good at content marketing at Barn too, and have a very established process.

[00:17:59] So I love the idea of acquiring something which hadn't got a blog, particularly because I felt that I could add real value and significantly increase the sales using our existing methods. So, um, in, um, got my dates open here, it was like, yeah, the end of June this year. Um, somebody contacted me on Twitter and said, I'm selling this WooCommerce.

[00:18:22] A product tabs plugin and are you interested in acquiring it? Um, this was a company that they wanted to focus on client work, and they were selling their, I think, three products to different buyers. And I felt that Product Tabs was a good fit for us because it, it, as I said, it's a specific feature for WooCommerce and in fact, it's an idea that we've thought about building ourselves because it fits quite nicely with.

[00:18:47] Some of our other products because some of the content added by our existing products would work well within an extra tab on the product page, so naturally there would be crop. Cross selling opportunities between the different plugin. So I was quite interested in that. Um, so, um, just to share, I'll tell you a bit about the process, um, so that, um, people who haven't done it before can think about how that might all work.

[00:19:13] Um, the other thing that attracted me was that it was fairly small scale. Um, we could have spent more on a bigger product, but because this is my first experience, I wanted to do it on something fairly small. So that I could make mistakes and learn from them instead of doing a really massive acquisition and then, uh, regretting making terrible mistakes or something.

[00:19:34] So, um, I sent it first off to my head of plugin development to do some quality checking. And he confirmed that while it wasn't fully our standards, it was a good product and something we could work with. Um, we just need to do some changes, which is fine. And, um, looked at the, they had a pre, a free version with nine and a half thousand users, which have amazing reviews, so that's great.

[00:20:00] And asked lots of questions about the amount of support that they provide and so on. And I was also really attracted. Because they use free MIUs. And the great thing about FIUs is that frees are the merchant of record to use a legal term. And when you acquire a FIUs product, you can actually take over the subscribers.

[00:20:21] So if people have got an annual subscription for that product, normally you lose it. Um, you, they have to get 'em to manually renew with you, which as most people know. MA will kill your renewal rates. If you make people renew manually, you get like 90% less than if it's automatic. So I really love the fact that they were on MIUs and they only had about 93 subscribers.

[00:20:45] It wasn't huge money, um, on renewals, but I like the fact that we could inherit those. Um, and we also looked at the technical feasibility of integrating that with our licensing system because we use easy digital downloads and we want to, wanted to use that for any plugins that we acquire in the future.

[00:21:03] But we also didn't wanna lose the freest customers, so there were a few technical challenges. Um, they're after consulting with the, sorry. I

[00:21:12] Amber Hinds: can I, uh, can I just ask, I know I, Keenan you've told me a few stories about your experience with Stripe and this sort of seems like a good follow up to Katie's point.

[00:21:21] Mm. So I don't know if you mind us interrupting for saying Katie, but I'd really be curious to have Keenan share what his experience was like purchasing a product where all the sales were running through Stripe versus what you just shared about Free. It sounds like it was easy for them to just transfer the account to you.

[00:21:39] Keanan Koppenhaver: Yeah, that's the, that's the dream. Honestly, that was, that's if, if I was gonna do this again, um, that would be a huge question that I would have. So, for the, for the Combine acquisition, um, we basically just took over the PayPal and Stripe accounts that were being used to process the payment. So we updated all of, uh, like the business information so that all of the records and stuff started coming to us.

[00:22:00] We didn't have to do any migration there for the WP Pusher acquisition. Um, Peter basically for, for tax reasons, like needed to keep his Stripe account. Um, and Stripe doesn't really have any way to migrate user subscriptions. So for, I think it was 200 or 300 customers, I basically had to make a Google sheet, figure out when people's subscriptions renewed, go into my Stripe account, create them a new subscription, a new annual subscription, but like credit them back for their specific number of days so that their subscription would renew at the right time and they wouldn't get charged extra and all that stuff.

[00:22:37] So, um, it was definitely a very manual process. And were you able to.

[00:22:43] Amber Hinds: Were you able to get the credit card information from his Stripe account to import into your Stripe account? Or did you So Stripe, yes. Put 'em all in and it was like they were gonna expire unless they went in to. Add credit card info?

[00:22:55] Keanan Koppenhaver: No.

[00:22:55] So Stripe, Stripe will transfer you the customers. So they basically, they keep all of their credit card details encrypted. They just transfer the customers into your account so that you, you're not touching credit card information or anything like that. Um, but they will not transfer the active subscriptions.

[00:23:11] So basically we got all the customers transferred into our new Stripe account, but none of them had active subscriptions. So then I had to go in and do, and enable all their subscriptions manually and give them a free trial, essentially, of the number of days remaining on their current subscription with, with Peter.

[00:23:29] So that was about 12 hours. I managed to do it all in one day, just start to finish. But it was a, it was a long manual process that, uh, I would not recommend. So yeah, if, if somebody is looking at acquiring a product that's not using one of these layers on top of a payment processor like EDD or like frees.

[00:23:46] Um, that's definitely something to keep in mind is that there may be some kind of backend administrative work to make sure that everybody transfers because exactly like Katie said, you wanna make it a very seamless experience, um, for the end customer. That's better for them, first of all. But also it's, it's better for you in terms of retaining customers and, and making the acquisition go more smoothly.

[00:24:05] So that's very important For sure.

[00:24:08] Katie Keith: I think that would really affect the valuation of the product you are acquiring as well. Um, and how, whether you might lose them. Um, it's a really interesting learning point actually, that when there was a dedicated Stripe account for that product that you are requiring, you could take over the account, but if you weren't able to, for whatever reason in that, this case because they needed it for tax reasons, but more commonly or equally commonly, I would just.

[00:24:32] Expect that people have multiple products going into the Stripe account or PayPal, whatever, and therefore they can't split it out, um, if they're selling to different people or just selling one product to you. So there's lots of reasons why that wouldn't be possible. So maybe as product owners on the other side of it, we should be thinking about should we have different accounts, um, for each of our products in case we want to sell them separately in the future or something.

[00:24:58] Um, that would be a bit of a nightmare if you have a lot, but it is a fact. So when you're planning your kind of business structures and things, isn't it, that might affect your own valuation in the future?

[00:25:09] Keanan Koppenhaver: Yeah. And another piece of that too was we talked a little bit about how Stripe was willing to migrate those customers over for us.

[00:25:16] Um, but they don't really give you any sort of estimate on how long that will take. And so we had a long, like we had, Peter and I initially set a timeline of when we wanted to complete the acquisition. Um, and then we just spent multiple weeks where we didn't hear back from Stripe on like updates of when the customers would be in the account, et cetera.

[00:25:34] And so. That affected our, our timeline a bit. And obviously then as soon as the customers were transferred, kind of the subscription migration had to happen, um, right away, pretty much. So, um, that made things a bit harder to plan for. And so I think that's another point in favor of using some of these tools that manage all that for you, like, or MIUs, is that, um, you know, it, it does make that that transition smoother.

[00:25:57] And yeah, I think Katie, to your point, that definitely. Should be something you factor into the valuation process, both as someone selling a, a plugin, trying to get the, the most value out of your product, or, um, someone looking on the buying side is that's, that's just one of the factors of how clean of a transaction is this gonna be and, and how, how smooth can the process be?

[00:26:17] So.

[00:26:18] Amber Hinds: Yeah, I think I read somewhere that Pippen, one of their strategies had been, um, for all of the plugins that his company owned, was that they set up a separate Stripe account for every single plugin from the beginning. And so that way his thought was, if I ever sell this, it'll be really easy. I just send people to log in.

[00:26:39] You know, like add them as an administrator. Right. And then they remove me and it's

[00:26:44] Katie Keith: done.

[00:26:45] Keanan Koppenhaver: Yeah,

[00:26:46] Katie Keith: which kind of makes sense at his scale. I mean, can you imagine the money from Easy Digital downloads going to the same Stripe account as affiliate wp? They're both so enormous that you would expect them to be set for it, but like in my case, I've got.

[00:27:00] 23, I think plugins at the moment. And some of them do, um, I don't know, more than 10,000 a month. Others do a few hundred a month, the lower selling ones, and it would be a kind of an administrative nightmare for something. So small scale to have 23 different payment accounts. And that would be PayPal and Stripe.

[00:27:19] So that's 46. So, uh, it's a challenge, um, if you're on a smaller scale.

[00:27:24] Amber Hinds: Yeah. But on, on the other side though, like thinking about that as a buyer. Um, you know, like Keenan, you mentioned spending all this time in a spreadsheet, but I'm guessing maybe you were sub, you know, 10,000, uh, subscribers. Right. Could you imagine if there were.

[00:27:43] A 500,000 subscription, like I don't know how much time that would take to actually manually, I mean probably at that point you'd have to do some sort of API thing to stripe's API to do it. There's no way, like it would take so much time for a human to do that. So I think that is definitely something that needs to be considered if you're planning to buy a product, is how are you actually going to get those subscriptions.

[00:28:07] Or like you said, Katie earlier, you know, you were thinking about. Is there just gonna be churn?

[00:28:15] Katie Keith: Yeah. 'cause statistically they're more likely to churn if they have to do something manual. Um, so yeah, it all affects the valuation.

[00:28:25] Amber Hinds: Mm-hmm. Yeah. Did you, did, I know I sort of cut you off a little bit there, but did you have other things to say on your experience buying the plugin?

[00:28:35] Katie Keith: Um, yeah, so I looked at all of that and, um, negotiated.

[00:28:40] Um, I didn't pay what they were asking. I'm not allowed to say the amount. Um, we've discussed that, but I did get 'em down quite a lot. And a, a great tip is. Try not to care because I wanted to acquire something fairly small. I knew it wasn't going to change the world because it was fairly small and uh, it was kind of, I hope it will be kind of medium sales in terms of our overall product range.

[00:29:05] I don't expect it to be one of our biggest sellers, so therefore I was perfectly happy for it to go ahead. It was a good fit. It worked. I was equally happy if it didn't, and that made me a lot stronger than if I really had my heart set on it. So I think if you are negotiating to acquire a product, really try not to care too much because that makes you strong.

[00:29:26] And um, that was really good. And it was also nice that they'd identified us as a preferred buyer and said they weren't talking to anybody else. So that made me feel stronger again. Um. Not, um, in pushing back a bit. So we did the deal. I thought about whether to involve a lawyer, but because it was fairly small, I just got some legal agreements that some of my, um, other friends in the WordPress industry have done when they've done acquisitions and kind of tailored it myself.

[00:29:56] And I know it's not the most suit, most formal thing ever, but it was fairly smart, not legal advice. Yeah, always get a lawyer, but if you don't, yeah, and I did use escrow as well to hold the money. Um. So that side of it was kind of secure. Uh, and then it all went ahead. It was dead easy. Um, it took about three weeks from the initial contact to the payments all being released and finalized and everything handed over.

[00:30:24] It was really quick and simple, which was just what I wanted. And, um, FIA stuff was easy. They just. They must be like a button in free music that they just pop the products over to your account and suddenly we had a free music account with all these sub subscribers in it, which was great. And support wise, um, as you mentioned at the beginning, Amber, we were taking over an existing product with people asking for supports, and there have been a few unexpected things, um, in the last couple of weeks.

[00:30:55] For example, people coming to us saying that the previous owner had promised them something, well, we don't know. We don't have access to the previous support. Um, like a feature, like they're, like they said they would

[00:31:07] Amber Hinds: build me this. Feature is, is that what it was? Or,

[00:31:11] Katie Keith: yeah. And we're like, well, we will assess that as a new decision.

[00:31:14] Um, and, you know, we've done a feature request list and so on. Uh, so there's things like that. Um, it's a bit harder to support them because. With our easy digital downloads users, everything comes through it to help Scout so we can instantly see if they have an active license. With MIUs, it's, we have to log in and it's a bit more of a pain.

[00:31:35] So there's a few things like that that I hadn't really thought through, but they're not the end of the world, and so we divided it into a two stage project. First of all, just getting the licensing sorted so that we could start selling the products on our own website. And that took a week or two. And then now we're doing a kind of phase two project to make it more like a barn two plugin in terms of the quality and the user experience and all of that.

[00:32:02] Um, and my developer at the beginning did advise me it's gonna be a couple of weeks more work than if we just built the product from scratch. Uh, so there is that to consider. Um, but I decided that because of the existing, you know, free version with nine and a half thousand units. Users, the 93 subscribers, that kind of thing.

[00:32:24] I felt that would probably outweigh the extra development time, but it wasn't a shortcut in that sense.

[00:32:31] Amber Hinds: What about you, Kenan? Was there anything unexpected that came up after you purchased either of your plugins or anything on the support in that you had to deal with?

[00:32:40] Keanan Koppenhaver: Yeah, su support's been a challenge.

[00:32:42] We've had, we've had a couple issues with, we, like I, one of the original things we tried was trying to consolidate the support of everything into kind of one system. Um, the Kanban support has traditionally just been managed as a Gmail inbox, so, um, you know, that's pro pros and cons of that. Like we were able to get that transferred over as well, but it doesn't have some of the features of like a help scout and, and that sort of thing.

[00:33:04] So. Um, the one thing that was really nice because we got access to the Gmail inbox for Kanban and, um, W Pusher and Branch both had help Scout accounts. Um, we didn't have any of those issues that Katie was talking about where, um, because we could see the entire conversation history, it's someone had had with the, with the previous owners in both cases.

[00:33:24] Um, we were able to handle that pretty well, but we did, we have had issues with like stuff getting flagged to spam specifically on the Gmail side. Um, where like legitimate support requests get flagged to spam and we don't see them. And then people come in the WordPress support forums and say, Hey, like this, we're not getting any response for, from our issue.

[00:33:43] Um, and so that's, we basically turned off spam filtering for that account at the moment so that we see everything, um, and are trying to find a better solution to manage that. But I think one of the. The key things that we learned and and I learned specifically as part of the process is, um, whatever number the current owners of a product tell you, you'll likely spend on support because that's what they spend on support.

[00:34:06] Um, it's gonna be much higher than that. Not necessarily because they're being dishonest, but because. If, especially if they're the original developers of the product, they know all of the shortcuts. They know when a bug comes in, they just have the instinct of where the problem probably is, or they've seen the same problem five times before.

[00:34:23] Um, and as someone coming into a brand new code base, you don't necessarily have that benefit. So even if, you know they were completely expertly tracking their amount of time spent on support and reporting that number directly to you, um, you shouldn't take that at at face value. And, and you should anticipate spending probably two x of that, at least at the beginning.

[00:34:42] Just as you kind of get a, get a feel for things.

[00:34:45] Amber Hinds: Yeah. I think that would be pretty similar to like if you took over maintenance and support for a website that you didn't build. Yep. Right. Like in very much the same way, if you don't know the code base, you don't know what's already there. I could see that.

[00:35:00] Yeah. You definitely need to assume that it's gonna take you a lot longer to solve any request. So. Other,

[00:35:07] Katie Keith: or even internally within your own company, that if you assign a new developer to a project or a a, a plugin, then they have that learning curve as well.

[00:35:17] Amber Hinds: Mm-hmm. Yeah. New hires the same sort of thing.

[00:35:20] Yeah. So I wonder if this is a good time to transition into our best advice. Yeah.

[00:35:27] Katie Keith: Sounds good.

[00:35:30] So, um, who, so Amber, do you wanna go first? So what would be your best advice to people considering purchasing a WordPress product instead of building it?

[00:35:41] Amber Hinds: Yeah, so my advice as someone who has looked at buying one, decided not to, is to really due diligence on, do due diligence on the numbers, what they actually are.

[00:35:54] Um, not just. In the past trailing 12 months, I would go longer than that if you can and try to spend time forecasting out, um, if it's a freemium, you know, what is free user growth or customer growth look like. Um, and then obviously what is the subscription cancellation rate, um, would be really important to look at, uh, on that revenue.

[00:36:22] And, and if you can, doing any sort of. Diligence around just trends in the specific space. Spend time researching competitors or ask the, the seller if they have competitor research that they can provide you with. Um, you know, I think both of you kind of talked about how you assessed. What categories make sense for you, right?

[00:36:47] If you already do a lot in WooCommerce, maybe it makes sense to acquire another WooCommerce plugin. So if you, if you're going into a area of WordPress products that you're less familiar with, I think you need to spend more time doing research than you probably think. So, just because, um, if you're investing money in it, you don't want it to be a loss.

[00:37:10] What about you, Keenan? What, what would your recommendations be?

[00:37:13] Keanan Koppenhaver: Yeah, I would say to echo your point, um, you know, if you're not a developer, probably don't acquire a developer tool. If you don't use Elementor, don't acquire Elementor add-on. Like that's, it's just like, to your point, it's just a much steeper learning curve and there's a lot more blind spots that you might have just because you're not familiar with that particular area of, of WordPress.

[00:37:34] Um, the other thing I would say is you probably want to have a plan for at least the first kind of three to six months of what you think you're gonna focus on. Not saying that you'll be able to do that because things, things change and things come up. But at the very least, um, you know, when, when you get into this and you acquire a product, as soon as you are handed the keys to everything, there will be 50 different things that you could do in most cases.

[00:37:59] Um, and it's easy to just kind of pick one thing from each of those buckets and not make a ton of progress overall on any kind of bigger initiatives. But, um, if you have that plan going forward, like, okay, we're gonna really. Systematize support or we're going to really augment the documentation so that we don't get as many support queries because where people are asking for stuff that, uh, we could just have public documentation on the site for, um, figure out kind of what those bigger projects are gonna be and where it makes the most sense to focus your time, um, and, and try to stick to those, um, even in the face of incoming support requests and trying to learn the code base and um, and all of that.

[00:38:38] Katie Keith: Yeah, definitely all really important stuff. So my best advice would be to carefully consider the pros and cons of building yourself versus acquiring an existing product. And to do that, consider all the factors, uh, like the comparative cost of development, um, the opportunity cost of your time, um, because.

[00:38:59] Things like taking over an existing product and the legal wranglings and negotiations and admin, that's all time you could be spending doing something else. So you do need to factor that in, uh, the risk, the quality of the product and whether you can inherit existing subscribers, as we've talked about, is really important.

[00:39:17] And all together, this will help you decide whether it's, what it, what it's worth to your business so that you pay the right amount and help you to make the right decision on whether to go ahead.

[00:39:31] Amber Hinds: Yeah, so I, I mean, I think, I think too, like team and scale and all of that, um, it all comes down to planning and thinking pretty deeply about it. So, um, well it's been great having you on, uh, Keenan. So thank you so much for joining us and tons of great advice for people who are thinking about purchasing a.

[00:39:57] WordPress product. Um, and I know you also linked some notes, which will include in the show notes some articles and resources about some of your acquisitions, um, both on your blog and on WP Tavern. So we'll make sure that we share those with everyone. So check the show notes. Um, next week we will be back.

[00:40:15] It'll be Katie and Zach and they'll be discussing social media marketing with special guest Carmen Kendrick. So make sure that you subscribe and tune in.

[00:40:26] Katie Keith: Yeah, definitely. And thanks again to Keenan. I hit like, subscribe all the helpful and nice things for us and we will see you next week. Bye.