#879 Sell Your Company Without Venture Capital w/ Andrew Gazdecki

Andrew Gazdecki the Founder & CEO of MicroAcquire. In this conversation we discuss entrepreneurship, bootstrapping, celebrating success, and how MicroAcquire is building a platform to help people buy and sell businesses without any venture funding. ======================= Bitcoin 2022 is the LARGEST Bitcoin event in the world that takes place April 6th - 9th in Miami Beach, Florida. All four days will be jammed-packed with exclusive content, exciting announcements and an incredible lineup of bitcoin speakers, artists and leaders. Day 1 is INDUSTRY DAY for enterprising bitcoiners who are looking to build a business or career within the ecosystem. Days 2 and 3 are general conference days featuring speakers like El Salvador President Nayib Bukele, CEOs like Michael Saylor, Elizabeth Stark, Jack Mallers, Adam Back and hundreds more. The conference caps off on the fourth day with the world's first and largest Bitcoin Music Festival - Sound Money Fest headlined by rapper and fellow bitcoiner Logic, featuring artists K. Flay, MØ, Royal & the Serpent, Apashe, Asadi and more. Stay tuned for the upcoming lineup announcement! Last year’s conference SOLD OUT and this year’s is on pace to be 3x larger so make sure you grab your tickets before it's too late. Visit http://b.tc/conference to learn more. Ticket prices increase on JAN 14th, use promo code POMP for 10% off and I will see you in Miami!ire ecosystem bringing utility to #NFTs. ======================= Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. No extension required. Store, manage, and grow your portfolio, get NFT & multi-chain support, and more. Download the Brave privacy browser at brave.com/Pomp, and click the wallet icon to get started. =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Andrew Gazdecki is the founder and CEO of MicroAcquire. In this conversation, we talk about bootstrapping, entrepreneurship, small business in America, and also why it is so important for us to celebrate the wins of the entrepreneurs that sell for multi-millions of dollars without any venture funding. I really enjoyed this conversation with Andrew, and I hope you do as well. But before we get into this episode, I want to quickly talk about our sponsors. This episode is brought to you by FTX US. FTX.us is the safe, regulated way to buy and sell Bitcoin and other digital assets. You can trade crypto with up to 85%

• 0:47Anthony Pompliano?

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• 1:31Anthony Pompliano?

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• 2:10Anthony Pompliano?

  Pomp and click the wallet icon to get started. Today's episode is sponsored by the Bitcoin 2022 Conference. Bitcoin 2022 is the largest Bitcoin event in the world that takes place April 6th through the 9th in Miami Beach, Florida. All four days will be jam packed with exclusive content, exciting announcements, and an incredible lineup of Bitcoin speakers, artists, and leaders. Day one is Industry Day for enterprising Bitcoiners who are looking to build a business or career within the ecosystem. Days two and three are general conference days featuring speakers like El Salvador President Nayib Bukele, CEOs like Michael Saylor, Elizabeth Stark, Jack Mahlers, Adam Back, and hundreds more. The conference caps off on the fourth day with the world's first and largest Bitcoin music festival, Sound Money Fest, headlined by rapper and fellow Bitcoiner Logic, featuring

• 2:55Anthony Pompliano?

  artists K. Flay, Mo, Royal, and The Serpent, Apache, Asadi, and more. Stay tuned for the upcoming lineup announcement. Last year's conference sold out, and this year's is on pace to be three times larger, so make sure you grab your tickets before it's too late. Visit b.tc/conference to learn more. Again, that's b.tc/conference to learn more. Ticket prices increase on January 14th. Use promo code POMP for 10% off, and I will see you in Miami. All right, let's get into this episode. I hope you guys enjoy this one.

• 3:26Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:49Anthony Pompliano?

  We've got Andrew Gazdecki, the founder and CEO of MicroAcquire, who's going to be joining us. Andrew, how are you? I'm doing good. Thanks so much for the invite. I appreciate it, man. Dude, I'm super excited about this. So for everyone who doesn't know, let's just get it out of the way. I'm an investor in MicroAcquire, which means that betting on Andrew, betting on MicroAcquire to work. The good news for me is that it's working, and it seems like there's a lot of people who are selling their non-venture-backed startups.

• 4:20Anthony Pompliano?

  Or products via micro acquire. So can you give us kind of an update as to how it's been going so far in terms of any metrics you can share?

• 4:30Speaker 02

  Yeah, definitely. So I'll speak to two things. High level, we've transacted, I believe up to 300 million in closed acquisition volume. So we've helped facilitate well over 500 acquisitions. Last month alone, we did 65 million in acquisitions and 92 acquisitions. And then the month before that, January, I think a lot of people were closing on deals. So we did 120 plus acquisitions. And that was around like 70 million in acquisitions. So we're seeing tens of millions of dollars in closed acquisitions per month.

• 5:11Anthony Pompliano?

  And so when you think about this, like, who the hell is selling their businesses on a website and never meeting the buyers in person? Like, that's a crazy idea. 20 years ago, when things like Craigslist came on and people weren't selling their companies, they were selling a physical item, or they were trying to find information locally. Now, the idea to some people of, okay, I'm comfortable with a Craigslist, an eBay, you know, some sort of other marketplace. Now I'm going to sell my business and I'm going to do it via a platform like this. Like, who's the people that are actually doing this? And what types of businesses are actually being sold? Because these are, you know, big numbers in terms of the traction that you've seen already, where it's not just one or two companies per month doing this.

• 5:54Speaker 02

  Yeah, definitely. So we work with pretty much every type of buyer you could think of. So a lot of private equity firms, a lot of role plays, corp debt teams from public companies, even venture-backed companies, even bootstrap companies are acquiring other bootstrap companies.

• 6:10Speaker 02

  So we see acquiers.

• 6:14Speaker 02

  You know, M and A just had a banner year in 2001. I think so. We're riding kind of that tailwind. And when I started the business, I just thought, you know, entrepreneurship through acquisition is is gonna be a trend. And I made a bet on that and it's, you know, we're definitely benefiting from those tailwinds. But yeah, it's kind of crazy. I mean, you know, acquisitions are moving away from the golf course, steak dinners. And it's moving at a quicker pace. So it's, you know, how about a Zoom call? Like just from personal experience, when I sold business apps to prior company, I had never met the team in person. We just did Zoom calls, sent over the information they needed. So I think, you know,

• 6:57Speaker 02

  acquisitions, how they're conducted, it's changing.

• 7:03Speaker 02

  Obviously, on the larger scale, you know, there's more meetings, more, you know, in person, fly to the office, meet the team. But the companies that we're selling, you know, are generally sub 10 million in revenue. We're making it ever to like move up market. But yeah, it's fascinating to me. I mean, literally every day we see acquisitions ranging from, you know, $30,000 all the way up to like 5 million. So it's a, it's a pretty wide gap, 5 million. So it's a, it's a pretty wide gap. And then the companies that do sell,

• 7:39Speaker 02

  our main focus is profitable SaaS. So profitable startups is kind of our sweet spot. We've since expanded into e-commerce, newsletters, communities, crypto companies, mobile apps. Again, pretty much, we like to say, you know, we want to serve the market of profitable software companies. So anything that kind of falls within line with that is a good fit for Mark. My micro acquire.

• 8:07Anthony Pompliano?

  Got it. And then when when people are negotiating this, how much of it's like cash offers versus cash plus equity or earn outs seller financing? Like, is it mostly cash type offers? Or is it more what I'll just consider like complex type deal structures that people need to be well versed on deals to be able to do them?

• 8:24Speaker 02

  It depends on the buyer, but we see pretty much everything. I would say the most common would be all cash. So all cash upfront. There's been a good trend with private equity firms where their main selling point is quick through diligence, 30 days. If you want to stay in the business, if you want to leave the business, that's totally cool. If you want to keep a portion of the business, that's also that's stuff to negotiate with the buyer. But we see a lot of all cash deals. We see a lot of seller financing deals. Then we do see some of the more complex structures with like Aqua hires where you got to come on the team. There's like a four year vest of stock. So we kind of see the whole gamut, but I would say all cash is kind of what most buyers or excuse me, what most sellers are looking for.

• 9:10Speaker 02

  So that's typically what we see the most, but we see kind of everything. I've seen some crazy deal structures.

• 9:16Anthony Pompliano?

  What's like one of the deals that you're like, this is a quintessential micro acquire type deal? Can we walk through one of them as an example?

• 9:23Speaker 02

  Yeah, there's, there's a lot, like every week we create these, because these are like, you know, they're not, you know, deals that are going to make the headlines of like Wall Street Journal or Forbes or anything like you'll never hear about them. But they're life changing to, it's a life changing moment for the entrepreneurs selling their business. Cause they own the whole business. So if you sell the business for $2 million, like you're a millionaire. Congrats. My favorite story, just off the top of my head, I have a few, but there was a student in India and he created a platform that helped other engineers pass engineering tests at Google, all the fan companies.

• 10:06Speaker 02

  And he sold it for a quarter million dollars in India, all cash to actually one of my investors too, which is, you know, kind of how the whole circle can kind of come around. But he just wrote me this really heartfelt, you know, email saying like, dude, you like changed my life, like $250,000 in India. At age, I believe he was like 23 or 22, he was going to pay off his debt. He was going to buy something for his mom. And again, a micro core, we don't. Don't charge any commission. So I just said, like, congrats. Like, can you write us a review? Like, you know, I'm really happy for you. But, you know, we always like to say, you know, we want to create these small but life-changing acquisitions

• 10:50Speaker 02

  for startups all across the globe. So this is a story that happened in India. We're very active in, I like to say, every continent except Antarctica. We're still, we're still working hard on that one.

• 11:02Anthony Pompliano?

  Got it. And so when you start to look at this exact type of, of business, what, what strikes me, I guess, is some of these are technology only, no revenue, no anything. Some of them have revenue, but not profitable. And then there's plenty of businesses that get sold on here that are profitable. And, you know, so we look at it as like, that's like a quote-unquote real business, right? In terms of it's got staff, it's got a product, it's got revenue, profit, etc. Is there any trends that you see in terms of like where the sweet spot is? Is it like, hey, if you get to a million dollars in revenue, you've got a higher possibility of selling the business on micro-acquire or get a product built or get to profitability?

• 11:42Anthony Pompliano?

  Like, what are some of the best practices maybe that people should shoot for to be able to have a better chance of actually getting someone to buy their business via micro-acquire?

• 11:50Speaker 02

  Yeah, great question. So first one, so we stopped listing pre-revenue startups. So we only focus on businesses. Because really what buyers are looking for is product-market fit. They want to buy traction within a business that has, you know, because your other route is you think of an idea, you get customers, and that process can take two years. So by acquiring a company, you kind of fast forward, you know, two years or whatever. So we don't list any pre-revenue. If we do, we're really picky about it. But I would say it really depends on the entrepreneur's goals. Like, if they want to sell the business for a hundred thousand dollars, Or $500,000, you know, building it up to a certain revenue threshold and then pricing it correctly,

• 12:32Speaker 02

  understanding the acquisition process on Microquire. I don't want to plug Microquire too much, but we have all the resources on like, we have a whole course on what to expect, how to value your startup correctly.

• 12:45Speaker 02

  But if it was me, I would, I would probably, you know, shoot for, you know, a million in revenue minimum. Because that just opens up a different buyer pool. So every bucket has a different buyer pool. Some of the larger buyers are only looking for businesses, you know, over a million in revenue or over a million in profit. So it really depends on like, what's your personal goal is 200,000, 250,000, like the individual in India.

• 13:15Speaker 02

  That's like $10 million in, I don't know the conversion rate, but it was life changing for him. So, you know, I would just, you know, press entrepreneurs to kind of ask themselves like, what do they want to get out of an acquisition? Is it one or two or three million dollars? And then work towards that. But we do see a lot of businesses where the entrepreneur had built something great. They've already moved on to something else. And they're just looking to sell the business and it's a great business, happy customers, but they're really kind of shooting for something larger. And so they're looking to sell that business, use the funds typically to invest into their new ventures. So it just depends, like there's just buyers that will look for different attributes. So there's no like correct, like,

• 14:00Speaker 02

  I mean, I guess if I had to say like, what's the best way to succeed on Microquire? Build a really good business, grow to 10 million in revenue, make it really profitable, have zero churn, be growing 400% year over year, and then you'll get. Like a million offers.

• 14:18Anthony Pompliano?

  That would be good advice for any entrepreneur, my friend. That is not unique to MicroAcquire, although I appreciate you positioning it that way.

• 14:26Speaker 02

  No, we're headed there. We're, hey, you'll get, you'll get the next investor update. We're headed out of market.

• 14:32Anthony Pompliano?

  I love it.

• 14:34Speaker 02

  Micro is the new macro, is how I like to describe it.

• 14:37Anthony Pompliano?

  Facts, facts.

• 14:38Speaker 02

  Macro Acquire.

• 14:39Anthony Pompliano?

  Joe, John, what questions you guys have? Hey, Andrew, thanks for joining us. Obviously, a lot goes into the acquisition of a business, depending on kind of the size of it and whatnot. But do you guys have legal counsel or like M and A advisors that work with you? Or is this something that you like help facilitate through a third party when, when the issue comes up?

• 14:57Speaker 02

  Yeah, good question. So we help in two ways. So we have in-house legal counsel. We have an in-house investment banker slash business broker. And we also, if you go into MicroAcquire, we have a whole directory of M and A advisors, investment bankers, business brokers, attorneys, accountants, people to help with escrow, due diligence. So we've built basically a directory of third-party services that you can hire to help with your deal, from negotiations to pretty much every aspect of the acquisition. But another thing that we're doing on top of that is we're building tooling to really standardize acquisition process because a big, a big challenge that we see with people that are maybe doing their first acquisition is they kind of like get to

• 15:42Speaker 02

  terms, they're like, what do we do? Just put all your assets in a, you know, doc and I'll look them over and stuff like that. So we're building tools like a letter of intent. We have a letter of intent builder coming out, I believe, like maybe next week. So I click, click, click letter of intent. And then other things like due diligence, how do you accurately, you know, assess the financial health of the business? Then on top of that, how do you accurately assess the quality of the code that you're going to be buying? And that's a tricky one where, you know, you, as a founder, you don't want to give access to all your servers and stuff. Up before the transactions closed. So we're thinking about tools to help with that.

• 16:26Speaker 02

  And a number of other things like, you know, what to put in a data room. So we're building this like guided acquisition approach. And then any step along the way, if you have like, okay, I got to diligence. Maybe it's time to bring in M and A advisor. We have, I believe, 50 plus M and A advisors that you can hire and their ranges or their rates range from, you know, 2% to 10%, depending on the size of your deal.

• 16:54Speaker 01

  John, what do you got? Andrew, what is the communication like between the seller and the buyer? And you were talking about how it's very, very hard to underwrite a lot of that stuff. And you're basically, sometimes you're just looking at a P and L and trying to make a decision based off that. So what is the communication between the buyer and the seller?

• 17:09Speaker 02

  Again, it depends on the sophistication of the buyer, but within Microquire, what we can do is you can connect Stripe, you can connect ProfitWell, Bearmetrics, Google Analytics. We're actively working on other integrations like Xero. So we can give you, you know, financial statements, we can show, you know, churn, MRR, growth rate, all that sort of stuff. But again, it depends on the buyer, but the best advice I can give to founders looking to sell their business is just come prepared. Like a P and L with just, you know, a healthy snapshot of your business over the past three years can just be like, be the biggest difference maker.

• 17:53Speaker 02

  Cause it gives buyers an immediate look into the health of your business. But the challenge there is a lot of smaller startups don't have that. They don't have an in-house controller, they don't have an in-house VP of Finance. And so we're also building tools to help create those documents to make that acquisition process smoother. So it varies. I mean, sometimes, you know, there's some really savvy sellers that come in and they've sold multiple companies on Microquire and they kind of just have it down. And then there's some that, you know, need a little bit more handholding and. So we're focused on both sides of the fence where we're helping, you know, some of the more experienced buyers with better matchmaking, like, hey, this is a great startup.

• 18:37Speaker 02

  You could speak to them. And then for some of the startups that may not know, like, what do I need for an acquisition? We're building tooling to just make their lives easier as they go. And, you know, speak to a really experienced buyer. So we can really, you know, kind of level the playing field. Because, you know, right now, if you're a founder and you sell a company, it's like your first time ever. And then you're talking to someone who maybe buys companies for a living and it's Tuesday for them. So, you know, we really want to help founders, you know, empower them so we can maximize their exit, essentially.

• 19:10Anthony Pompliano?

  Have you guys seen a micro acquire flip yet where someone bought a business on your platform and then sold it?

• 19:16Speaker 02

  Yeah, we have multiple times. And even funnier, we've seen a micro acquire clones sold on microwire.

• 19:25Anthony Pompliano?

  That is incredible.

• 19:27Speaker 02

  Yeah. So, uh, micro acquire user, micro acquired a micro required clone on microwire.

• 19:34Anthony Pompliano?

  That's all the time. That's when you know it's working though, right?

• 19:38Speaker 02

  Yeah. I mean, and also, I mean, we're very neutral. So I look at them and one of them was really good. Um, it didn't have a lot of traction, but I like the brand. I like the founder, but we don't bid on them. We let free markets like, hey, if you want to compete, let's go. Um, again, you know, our only goal is really just to help more entrepreneurs get acquired and succeed. And the more people that want to kind of get in on this business, come on and join.

• 20:04Anthony Pompliano?

  So I just went to the marketplace here as a micro acquire user. Uh, and I'm looking at companies that could be purchased. And this is, uh, just the, the first couple. By the way, uh, you two, you guys may not know this. Me, I'm a premium buyer on microwire. I got a little star. Oh yeah, I'm, I'm. Everyone knows that the. What did you buy on microwire? What? What? What? What did you do on there?

• 20:28Speaker 02

  Would it be helpful to explain just kind of the business model like behind microwire?

• 20:32Anthony Pompliano?

  Explain it to the. These knuckleheads over here, Andrew.

• 20:35Speaker 02

  All right. So basically what we do right now is we don't charge any sort of commission fees to sell your business. We're going to be changing that and charging a small commission fee pretty soon here as we. Because what we want to do before we charge commissions is we want to add so much value to the acquisition that it stays on platform and then buyers and sellers are both more than willing to pay a small fee to get the deal done correctly. I think of it like insurance. And then right now, we just charge buyers access to be able to contact sellers. So the best way to think about that would be like, it's kind of like a Ferrari shop. You can go sit in the Ferrari, but if you want to contact the owner of the Ferrari, I'm terrible with analogies.

• 21:17Speaker 02

  But if you want to know like how many miles, like how did you maintain this? Would you negotiate on price to pay for that level of access? You'd have to pull a pump and go premium.

• 21:31Anthony Pompliano?

  Facts. The things that are on here right now, I'm just going to read through a couple of them real quick. So there's an AI-powered screening tool for high-volume recruiting and staffing, does revenue of $360,000 and was started in January of 2018. It's got a nine-person team.