The Inside Story of Beamer Acquiring Userflow to hit $10,000,000 in ARR

Summary

In this insightful discussion, the speaker shares the intricate process of acquiring a SaaS company, highlighting the importance of product vision, customer-centricity, and cultural alignment. The narrative details the challenges, emotional dynamics, and strategic considerations of M&A in the tech industry, including a near-miss acquisition and the successful integration of Userflow, emphasizing the value of direct conversations between founders and CEOs.

Takeaways

• 🗓️ The event discussed in the script took place on March 28th and 29th, with a follow-up event planned for September 5th and 6th in New York City.
• 📈 The speaker has been involved in the SaaS industry for 15-20 years, primarily as an operator, and has experience in self-financing and selling companies.
• 🔎 The speaker's company, Beamer, was identified as a potential acquisition due to its bootstrapped growth, international team, and lack of external financing.
• 💡 The need for higher growth and product evolution was a key driver for the acquisition, as Beamer's product had reached a saturation point in the market.
• 📊 Customer feedback indicated a strong demand for an improved guides product, which was a significant factor in the decision to pursue an acquisition.
• 💼 The acquisition process emphasized finding a complementary product that aligns with the company's ideal customer profile (ICP) and maintains focus on the same audience.
• 💰 Profitability was a critical criterion for the acquisition target, with Beamer being historically profitable and self-financed.
• 🤝 The importance of cultural fit and shared growth evolutions was highlighted, as was the preference for a product-led growth model over a sales-driven one.
• 🚫 The first potential acquisition fell through on the day of signing, resulting in a significant financial and emotional setback, including legal costs of up to $200k.
• 🤝 The successful acquisition of Userflow was facilitated by direct communication between CEOs, focusing on shared product vision and market understanding.
• 🌟 Userflow was identified as an ideal match due to its product-market fit, profitability, and strong customer retention, despite the founders initially having no intention to sell.

Q & A

When was the live event at SAS open.com mentioned in the transcript?

The live event at SAS open.com was recorded on March 28th and 29th.

What is the next event at SAS open.com mentioned in the transcript?

The next event at SAS open.com is scheduled for September 5th and 6th in New York City.

What is the speaker's background in the software industry?

The speaker has been in the SAS industry for about 15 to 20 years, mostly as an operator, self-financing and selling for companies.

What was the speaker's role at Camber Partners?

The speaker started off as an executive at a growth equity fund called Camber Partners.

How many companies did the speaker personally look at in the last 6 months according to the transcript?

The speaker personally looked at 150 companies in the last 6 months.

What stood out about Beamer as a company according to the speaker?

Beamer stood out because it was led by two founders, was bootstrapped, had grown to a few million dollars in revenue without any external financing, and was led by an international team.

What was the challenge with Beamer that the speaker mentioned?

The challenge with Beamer was that it had reached a point of its own inflation and needed to grow at a higher rate to avoid becoming feature-rich but stagnant.

What was a common request from Beamer's customers during the due diligence process?

A common request from Beamer's customers was for a better guides product, indicating a need for improved onboarding and guides capabilities.

What is a 'complimentary product' in the context of the speaker's M&A strategy?

A 'complimentary product' refers to a product that serves the same ideal customer profile (ICP) but offers additional features or products without changing the target audience.

Why was profitability important for the speaker when considering an acquisition?

Profitability was important because the speaker wanted to ensure that the business they were acquiring was financially stable and had been successful since its inception.

What was the unexpected outcome when the speaker was able to sign the term sheet with the first potential acquisition target?

The unexpected outcome was that the 'marriage' or deal did not happen on the day they were able to sign the term sheet, despite having spent significant time and resources on due diligence.

What was the initial response from Userflow's founder when the speaker reached out to them?

The initial response from Userflow's founder was that they were 100% bootstrapped and planned to stay that way, indicating no interest in an acquisition.

What was the turning point in the conversation with Userflow's founder that led to a successful acquisition?

The turning point was when the speaker discussed the founder's vision for the business and identified gaps in that vision, suggesting that selling now rather than later could be beneficial.

What was the key takeaway from the speaker's experience with the acquisition process?

The key takeaway was the importance of aligning on product vision, maintaining a customer-centric approach, and ensuring cultural fit, especially when dealing with distributed teams.

What was the role of the speaker in the acquisition of Userflow?

The speaker was on the buy side, having previously been on the sell side as a founder in multiple instances.

What was the speaker's strategy for dealing with the emotional aspect of M&A?

The speaker's strategy was to focus on the product vision and have a healthy debate between operators to ensure cultural and operational alignment.

What was the speaker's advice for those looking for capital without giving up equity?

The speaker advised signing up at founderpath.com for free to get an offer for non-dilutive deals with B2B software founders.